United Refining 10-K 2012 FY Annual report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE FISCAL YEAR ENDED AUGUST 31, 2012

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from            to            

Commission File No. 333-35083

UNITED REFINING COMPANY (Exact name of registrant as specified in its charter)

Pennsylvania	25-1411751
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

See Table of Additional Subsidiary Guarantor Registrants

15 Bradley Street, Warren, PA	16365-3299
(Address of principal executive offices)	(Zip Code)

(814) 723-1500

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12 (b) of the Act:

None

Securities registered pursuant to Section 12 (g) of the Act:

None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.    Yes  ¨    No  x

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.    Yes  ¨    No  x

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Date File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  x    No  ¨

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of the registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.x

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a small reporting company. See definition of “large accelerated filer” “accelerated filer” and “small reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer  ¨	Accelerated filer  ¨
Non-accelerated filer  x (Do not check if a smaller reporting company)		Small reporting company  ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  x

As of November 15, 2012, 100 shares of the Registrant’s common stock, $0.10 par value per share, were outstanding. All shares of common stock of the Registrant’s are held by an affiliate. Therefore, the aggregate market value of the voting and non-voting common equity held by non-affiliates of the Registrant is zero.

DOCUMENTS INCORPORATED BY REFERENCE:    None

TABLE OF ADDITIONAL REGISTRANTS

Name	State of Other Jurisdiction of Incorporation	IRS Employer Identification Number		Commission File Number
Kiantone Pipeline Corporation	New York		25-1211902		333-35083-01
Kiantone Pipeline Company	Pennsylvania		25-1416278		333-35083-03
United Refining Company of Pennsylvania	Pennsylvania		25-0850960		333-35083-02
United Jet Center, Inc.	Delaware		52-1623169		333-35083-06
Kwik-Fill Corporation	Pennsylvania		25-1525543		333-35083-05
Independent Gas and Oil Company of Rochester, Inc.	New York		06-1217388		333-35083-11
Bell Oil Corp.	Michigan		38-1884781		333-35083-07
PPC, Inc.	Ohio		31-0821706		333-35083-08
Super Test Petroleum Inc.	Michigan		38-1901439		333-35083-09
Kwik-Fil, Inc.	New York		25-1525615		333-35083-04
Vulcan Asphalt Refining Corporation	Delaware		23-2486891		333-35083-10
Country Fair, Inc.	Pennsylvania		25-1149799		333-35083-12

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FORM 10-K CONTENTS

		PAGE(S)
Item 1.	Business		4
Item 1A.	Risk Factors		13
Item 1B.	Unresolved Staff Comments		20
Item 2.	Properties		20
Item 3.	Legal Proceedings		20
Item 4.	Mine Safety Disclosures		20
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities		20
Item 6.	Selected Financial Data		20
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		21
Item 7A.	Quantitative and Qualitative Disclosures about Market Risk		34
Item 8.	Financial Statements and Supplementary Data		35
	Report of Independent Registered Public Accounting Firm		36
	Consolidated Financial Statements:
	Balance Sheets		37
	Statements of Operations		38
	Statements of Comprehensive Income (Loss)		39
	Statements of Stockholder’s Equity		40
	Statements of Cash Flows		41
	Notes to Consolidated Financial Statements		42
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure		72
Item 9A.	Controls and Procedures		72
Item 9B.	Other Information		73
Item 10.	Directors, Executive Officers and Corporate Governance		74
Item 11.	Executive Compensation		77
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters		81
Item 13.	Certain Relationships and Related Transactions, Director Independence		81
Item 14.	Principal Accounting Fees and Services		82
Item 15.	Exhibits, Financial Statement Schedules		83
	Signatures		87

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ITEM 1. BUSINESS.

Introduction

United Refining Company is a Pennsylvania Corporation that began business operations in 1902. We are the leading integrated refiner and marketer of petroleum products in western New York and northwestern Pennsylvania, which is located within the Petroleum Administration for Defense Districts I (“PADD I”). We own and operate a medium complexity 70,000 barrel per day (“bpd”) petroleum refinery in Warren, Pennsylvania where we refine crude oil into a variety of finished products, including various grades of gasoline, ultra low sulfur diesel fuel, kerosene, No. 2 heating oil and asphalt. We have a long history of service within our market area. Our first retail service station was established in 1927 near the Warren, Pennsylvania refinery, and we have steadily expanded our distribution network over the years.

Our operations are organized into two major business segments: refining/wholesale and retail. The refining division operates the refinery in Warren and offsite terminals. The wholesale division sells finished products produced at the Warren refinery, primarily in western New York and northwestern Pennsylvania to both our retail network and to third-party customers. The retail business segment sells petroleum products under the Kwik Fill^®, Citgo^®, Keystone^® and Country Fair^® brand names at a network of Company operated retail units and convenience and grocery items through convenience stores under the Red Apple Food Mart^® and Country Fair^® brand names.

For fiscal 2012, we had total net sales of $3.7 billion. Of total sales, petroleum based sales were approximately 52% gasoline, 21% distillate, 18% asphalt and the remaining 9% were from sales of merchandise and other revenue.

Our Operations

Refining Operations

Our refinery, located on a 107-acre site in Warren, Pennsylvania, has a nominal capacity of 70,000 bpd of crude oil processing and averaged saleable production of approximately 64,800 bpd during fiscal 2012. We believe our location in the product-short PADD I, in an area that is geographically distant from the majority of PADD I refining capacity, is a significant marketing advantage. The nearest fuels refinery is over 160 miles from Warren, Pennsylvania and we believe that no significant production from such refinery is currently shipped into our primary market area.

During March, 2012 we had a scheduled 15 day catalyst regeneration at the Reformer unit and Distillate Hydrotreater (“DHT2”) and also installed a second reactor at DHT2 to expand hydrotreater capacity. Refinery crude throughput was reduced to 52,650 bpd during March to manage intermediate product inventories.

Our Products

We produce three primary petroleum products: gasoline, middle distillates and asphalt. We presently produce two grades of unleaded gasoline, 87-octane regular and 93-octane premium, and also blend these to produce a mid-grade 89-octane. Middle distillates include kerosene, ultra low sulfur diesel fuel and No. 2 heating oil. We optimize our bottom-of-the-barrel processing by producing asphalt, a higher value alternative to residual fuel oil. Our refining configuration allows the processing of a wide variety of crude oil inputs and our ability to market asphalt on a year-round basis enables us to purchase selected heavier crude oils at higher differentials and lower costs.

Refining Process

Our production of petroleum products from crude oil involves many complex steps, which are briefly summarized below.

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We seek to maximize refinery profitability by selecting crude oil and other feedstocks taking into account factors including product demand and pricing in our market areas as well as price, quality and availability of various grades of crude oil. We also consider product inventory levels and any planned turnarounds of refinery units for maintenance. The combination of these factors is optimized by a sophisticated proprietary linear programming computer model, which selects the most profitable feedstock and product mix. The linear programming model is continuously updated and improved to reflect changes in the product marketplace and in the refinery’s processing capability.

Blended crude is stored in a tank farm near the refinery, which has a capacity of approximately 200,000 barrels. The blended crude is then brought into the refinery where it is first distilled at low pressure into its component streams in the crude and preflash unit. This yields the following intermediate products: light products consisting of fuel gas components (methane and ethane) and LPG (propane and butane), naphtha or gasoline, kerosene, diesel or heating oil, heavy atmospheric distillate, and crude tower bottoms which are further distilled under vacuum conditions to yield light and heavy vacuum distillates and asphalt. The present capacity of the crude unit is 70,000 bpd.

The intermediate products are then processed in downstream units and blended to produce finished products. A naphtha hydrotreater treats naphtha and FCC light catalytic naptha with hydrogen across a fixed bed catalyst to remove sulfur before further treatment. The treated naphtha is then distilled into light and heavy naphtha at a prefractionator. Light naphtha is then sent to an isomerization unit and heavy naphtha is sent to a reformer, in each case for octane enhancement. The isomerization unit converts the light naphtha catalytically into a gasoline component with 83 octane. The reformer unit converts the heavy naphtha into another gasoline component with up to 94 octane depending upon the desired octane requirement for the grade of gasoline to be produced. The reformer also produces as co-product hydrogen needed to operate hydrotreating units in the refinery.

Raw kerosene is treated with hydrogen at a distillate hydrotreater to remove sulfur to make finished kerosene. A distillate hydrotreater built in 1993 and modified in 2012 with the addition of a second reactor also treats raw distillates to produce ultra low sulfur diesel fuel.

The long molecular chains of the heavy atmospheric and vacuum distillates are broken or “cracked” in the FCC unit and separated and recovered in the gas concentration unit to produce fuel gas, propylene, butylene, LPG, light and heavy catalytic naptha gasoline, light cycle oil and clarified oil. Fuel gas is burned within the refinery, propylene is fed to a polymerization unit which polymerizes its molecules into a larger chain to produce an 87 octane gasoline component, butylene is fed into an alkylation unit to produce a gasoline component and LPG is treated to remove trace quantities of water and then sold. Clarified oil is burned in the refinery or sold. Various refinery gasoline components are blended together in refinery tankage to produce 87 octane and 93 octane finished gasoline. Likewise, light cycle oil is blended with other distillates to produce No. 2 heating oil. FCC light and heavy catalytic naptha is hydrotreated in order to meet new more stringent legally mandated limits on gasoline sulfur content which took effect January 1, 2008, and a portion of the light cycle oil is hydrotreated in order to meet new more stringent legally mandated limits on diesel fuel sulfur content which took effect June 1, 2006.

Our refining configuration allows the processing of a wide variety of crude oil inputs. During the past five years our inputs have been of Canadian origin and range from light low sulfur (38 degrees API, 0.5% sulfur) to high sulfur heavy asphaltic (21 degrees API, 3.5% sulfur). Our ability to market asphalt on a year round basis enables us to purchase selected heavier crude oils at higher differentials and thus at a lower cost.

Supply of Crude Oil

Substantially all of our crude supply is sourced from Canada and the northern plain states through the Enbridge Pipeline. We are however, not dependent on this source alone. While not utilized during the closure of the Enbridge 6B Pipeline because of the anticipated length of the disruption, we could within 90 days shift up to

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70% of our crude oil requirements to some combination of domestic and offshore crude. With additional time, 100% of our crude requirements could be obtained from non-Canadian sources. This change in crude supply could result in a different crude slate and alter product yields and product mix and could affect refinery profitability. Sixty-nine percent of our term contracts with our crude suppliers are on a month-to-month evergreen basis, with 60-to-90 day cancellation provisions; 31% of our term crude contracts are on an annual basis (with month to month pricing provisions). As of August 31, 2012, we had supply contracts with 13 major suppliers for an aggregate of 58,600 bpd of crude oil. We have contracts with four suppliers amounting to approximately 58% of daily crude oil supply (none more than 10,000 barrels per day). None of the remaining suppliers accounted for more than 10% of our crude oil supply.

We access crude through the Kiantone Pipeline, which connects with the Enbridge pipeline system in West Seneca, New York, which is near Buffalo. The Enbridge pipeline system provides access to most North American and foreign crude oils through four primary routes: (i) Canadian and US domestic crude from both Western Canada and North Dakota (Bakken) are transported eastward through the Enbridge mainline system (ii) foreign crude oils unloaded at the Louisiana Offshore Oil Port can be transported north via the Capline and Chicap pipelines and into the Enbridge (Lakehead) mainline system at Mokena, near Chicago, IL (iii) US domestic crude grades can be transported north via the Capline System and/or the Enbridge Mid-Continent (Ozark/Woodpat ) system to Patoka, Illinois where they can be moved via the Chicap Pipeline into the Enbridge (Lakehead) Mainline system at Mokena, near Chicago, Illinois and (iv) foreign crudes unloaded at Portland, Maine are shipped to Montreal then shipped on Enbridge’s line 9 to both Sarnia, Ontario and Westover, Ontario. Enbridge has announced the Phase I (partial) reversal of Line 9. This reversal includes the segment from Westover to Sarnia. It does not interfere with crude deliveries from Montreal to Westover and deliveries into West Seneca. We have also begun to receive US domestic crude (Bakken) via rail deliveries into Hamburg, NY where these volumes are trans-loaded and moved by truck to West Seneca, NY and into the Kiantone Pipeline.

The Kiantone Pipeline, a 78-mile Company-owned and operated pipeline, connects our West Seneca, New York terminal at the pipeline’s northern terminus to the refinery’s tank farm at its southern terminus. We completed construction of the Kiantone Pipeline in 1971 and have operated it continuously since then. We are the sole shipper on the Kiantone Pipeline, and can currently transport up to 70,000 bpd along the pipeline. Our right to maintain the pipeline is derived from approximately 265 separate easements, right-of-way agreements, licenses, permits, leases and similar agreements.

The pipeline operation is monitored by operators using a recently upgraded Supervisory Control and Data Acquisition (“SCADA”) system. Shipments of crude arriving at the West Seneca terminal are separated and stored in one of the terminal’s three storage tanks, which have an aggregate storage capacity of 413,000 barrels. The refinery tank farm has two additional crude storage tanks with a total capacity of 200,000 barrels. An additional 35,000 barrels of crude can be stored at the refinery.

Refinery Turnarounds

Turnaround cycles vary for different refinery units. A planned turnaround of each of the two major refinery units (the crude unit and the FCC) is conducted approximately every three to five years, during which time such units are shut down for internal inspection and repair. Turnarounds occurred in October and November 2010 at our FCC unit and its related processing equipment, and in March and April 2011 at our crude unit and its related processing equipment. A major turnaround, which generally takes three to four weeks to complete in the case of the two major refinery units, consists of a series of moderate to extensive maintenance exercises. The next turnaround is scheduled for March 2014 and will include a complete plant shutdown.

We defer the cost of turnarounds when incurred and amortized on a straight-line basis over the period of benefit, which ranges from 3 to 10 years (for tank turnarounds). Thus, we charge costs to production over the period most clearly benefited by the turnarounds.

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The scheduled maintenance turnarounds result in an inventory build of petroleum products to meet minimum sales demand during the maintenance shutdown period.

Wholesale Marketing and Distribution

On a wholesale basis, our wholesale division sells gasoline, distillate and asphalt products to distributor, commercial and government accounts and we sell propane to liquefied petroleum gas marketers. Our wholesale gasoline customer base includes branded dealer/distributor units operating under our proprietary Keystone^® and Kwik Fill^® brand names and units operating under the Citgo^® brand pursuant to a license agreement granting us the right to use Citgo’s applicable brand names, trademarks and other forms of Citgo’s identification. Approximately 20% of the gasoline stations within this network are branded Citgo^®.

In fiscal 2012, we sold on a wholesale basis approximately 45,000 bpd of gasoline, distillate and asphalt products to distributor, commercial, and government accounts. In addition, we sell approximately 1,000 bpd of propane to liquefied petroleum gas marketers. In fiscal year 2012, our production of gasoline, distillate, and asphalt sold at wholesale was 33%, 82%, and 100%, respectively. We sell approximately 98% of our wholesale gasoline and distillate products from our refinery in Warren, Pennsylvania, and our Company-owned and operated product terminals. The remaining 2% are sold through third-party exchange terminals.

We use a network of six terminals to store and distribute refined products. This network provides distillate and asphalt storage capacities of approximately 1,225,000 barrels as of August 31, 2012. During fiscal 2012, approximately 86% of our refined products were transported from the refinery via truck transports, with the remaining 14% transported by rail. All gasoline product is stored at the refinery.

In fiscal 2012, approximately 68% of our gasoline production and approximately 18% of our distillate production was sold through our retail network and the remaining 32% of gasoline production and 82% of distillate production was sold to wholesale customers. Asphalt is sold 100% at wholesale.

Long-term dealer/distributor contracts accounted for approximately 16% of our wholesale gasoline sales in fiscal 2012. Supply contracts generally range from three to five years in length, with branded prices based on our prevailing wholesale rack price in Warren. We distribute asphalt from the refinery by railcar or truck transport to end user contractors, in addition to re-supplying our asphalt terminals in Pittsburgh, Pennsylvania.

Our wholesale gasoline customer base includes 45 branded dealer/distributor units operating under our proprietary “Keystone^®” and “Kwik Fill^®” brand names. Long-term dealer/distributor contracts accounted for approximately 16% of our wholesale gasoline sales in fiscal 2012. Supply contracts generally range from three to five years in length, with branded prices based on our prevailing wholesale rack price in Warren.

We believe that the location of our refinery provides us with a transportation cost advantage over our competitors, which is significant within an approximately 100-mile radius of our refinery. For example, in Buffalo, New York over our last five fiscal years, including fiscal 2012, we have experienced an approximately 2.5 cents per gallon transportation cost advantage over those competitors who are required to ship gasoline by pipeline and truck from New York Harbor sources to Buffalo.

Our ability to market asphalt is critical to the performance of our refinery. Crude oil scheduling and a consistent marketing effort enables the refinery to process lower cost higher sulfur content crude oils, which in turn affords us higher refining margins. Sales of paving asphalt generally occur during the period May 1 through October 31 based on weather conditions. In order to maximize our in season asphalt sales, we increase our asphalt storage capacity through the lease of outside terminals. Partially mitigating the seasonality of the asphalt paving business is our ability to sell asphalt year-round to roofing shingle manufacturers. In fiscal year 2012, we sold 7.5 million barrels of asphalt.

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We have a significant share of the asphalt market in southwestern New York and western and central Pennsylvania as well as in the greater metro areas of Pittsburgh, Pennsylvania and Rochester and Buffalo, New York. We distribute asphalt from the refinery by railcar and truck transport to our owned and leased asphalt terminals in such cities or their suburbs. Asphalt can be purchased or exchanged in the Gulf Coast area and delivered by barge to third party or Company-owned terminals near Pittsburgh.

During fiscal 2012, approximately 86% of our refined products were transported from the refinery via truck transports, with the remaining 14% transported by rail. The majority of our wholesale and retail gasoline distribution is handled by common carrier trucking companies at competitive rates. We also operate a fleet of eight tank trucks that supply approximately 25% of our Kwik Fill^® retail stations.

Product distribution costs to both retail and wholesale accounts are minimized through product exchanges. Through these exchanges, we have access to product supplies at approximately 18 sources located throughout our marketing area. We seek to minimize retail distribution costs through the use of a system wide distribution model.

Retail Operations

As of August 31, 2012, 169 of our retail units were located in New York, 179 in Pennsylvania and 13 in Ohio. The retail segment sells petroleum products under the Kwik Fill^®, Citgo^® and Keystone^® brand names and grocery items under the Red Apple Food Mart^® and Country Fair^® brand names. We believe that Red Apple Food Mart^®, Kwik Fill^®, Country Fair^®, Keystone^® and Citgo^® are well-recognized names in our marketing areas. Approximately 20% of the gasoline stations within this network are branded Citgo^® pursuant to a license agreement granting us the right to use Citgo’s applicable brand names, trademarks and other forms of Citgo’s identification. In fiscal year 2012, approximately 67% of the refinery’s gasoline production was sold through our retail network. In addition to gasoline, many sell diesel fuel, all units sell convenience and grocery items through convenience stores under the Red Apple Food Mart^® and Country Fair^® brand names. As of August 31, 2012, we operated 361 units, of which 193 units are owned, 107 units are leased, and the remaining stores are operated under a management agreement. 103 are Quick Serve Restaurants (“QSRs”) including franchise operations and eight of the units are full-service truck stops. Customers may pay for purchases with credit cards including our own Kwik Fill^® credit card. In addition to this credit card, we maintain a fleet credit card catering to regional truck and automobile fleets. Sales of convenience products, which tend to have constant margins throughout the year, have served to reduce the effects of the seasonality inherent in gasoline retail margins. We maintain a 60% / 40% split between sales at our rural and urban units, balancing the higher volumes and lower gross margins in urban areas. We believe that the Company operation of our retail units provides us with a significant advantage over competitors that operate wholly or partly through dealer arrangements because we have greater control over pricing and operating expenses.

Retail Marketing and Distribution

We classify our retail stores into four categories: convenience stores, limited gasoline stations, truck stop facilities, and other stores. Convenience stores sell a wide variety of foods, snacks, cigarettes and beverages and also provide self-service gasoline. One hundred and three of our 361 retail outlets include QSRs where food is prepared on the premises for retail sales and also distribution to our other nearby units that do not have in-store delicatessens. Limited gasoline stations sell gasoline, cigarettes, oil and related car care products and provide full service for gasoline customers. Truckstop facilities sell gasoline and diesel fuel on a self-service and full-service basis. All truckstops include either a full or mini convenience store.

Total merchandise sales for fiscal year 2012 were $278.0 million, with a gross profit of approximately $70.2 million. Gross margins on the sale of convenience merchandise averaged 25.2% for fiscal 2012 and have been relatively constant at 25.2% for the last three years. Merchandise sales have shown continued positive growth.

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Merchandise Supply

Tripifoods, Buffalo, New York is our primary wholesale grocery supplier for our entire chain. During fiscal year 2012, we purchased approximately 76.9% of our convenience merchandise from this vendor. Tripifoods supplies us with products including tobacco, candy, deli, grocery, health and beauty products, and sundry items. We also purchase coffee, dairy products, beer, soda, snacks, and novelty goods from direct store vendors for resale. We annually review our suppliers’ costs and services versus those of alternate suppliers. We believe that alternative sources of merchandise supply at competitive prices are readily available.

Location Performance Tracking

We maintain a store tracking mechanism to collect operating data including sales and inventory levels for our retail network. Data transmissions are made using personal computers, which are available at each location. Once verified, the data interfaces with a variety of retail accounting systems, which support daily, weekly, and monthly performance reports. These different reports are then provided to both the field management and administrative personnel. Upon completion of a capital project, management tracks “before and after” performance, to evaluate the return on investment which has resulted from the improvements.

Environmental Regulations

General

We are subject to extensive federal, state and local laws and regulations relating to fuel quality, pollution control and protection of the environment, such as those governing releases of certain materials to the air and water and the storage, treatment, transportation, disposal and clean-up of wastes located on land. As with the industry in general, compliance with existing and anticipated environmental laws and regulations increases the overall cost of business, including capital costs to construct, maintain and upgrade equipment and facilities.

Gasoline, Diesel Fuel, and Heating Oil Manufacturing Standards

Mandatory fuel regulations will continue to affect our operations including renewable fuel obligations, and future sulfur reductions.

Under the Renewable Fuel Standard (RFS) program small refineries were exempt from compliance through December 31, 2010. Section 211 (o)(9)(A)(ii) of the Clean Air Act authorized a study to determine whether compliance with the standards would impose a disproportionate economic hardship on small refineries. On April 22, 2011 the Company was identified as one of thirteen small refineries that received a two year extension to the RFS exemption until January 1, 2013.

To comply with the annual increases in renewable fuel obligations through 2020 additional expenditures will be needed for railcar and truck loading/unloading modifications. These additions will be completed by the spring of 2013 at a cost of approximately $2.7 million.

On July 20, 2010 the State of New York mandated that all heating oil sold in the state contain no more than 15 parts per million (ppm) sulfur beginning July 1, 2012. Pennsylvania is also discussing lowering the sulfur content which currently has a maximum of 5,000 ppm. We are complying with the New York mandate and will comply with the Pennsylvania mandate when applicable.

The USEPA is preparing to propose a new Tier 3 gasoline regulation which would call for a further reduction in the average sulfur content below the existing Tier 2 sulfur standard. They are considering a reduction in the refinery annual average maximum sulfur content from 30 ppm to 10 ppm. The Company is monitoring this proposal.

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We are also monitoring closely all climate change and Greenhouse Gas (“GHG”) legislation, better known as Cap and Trade as well as fuels mandates requiring the increased use of renewable resources in motor fuel. We believe, however, that implementation of reasonable, incremental changes over time will not have a material adverse effect on the Company’s consolidated financial position or operations. The ultimate cost of GHG reduction mandates and their effect on our business are, however, unknown until implementing regulations are available. Similarly, the costs of compliance with renewable fuels mandates in the future remains unknown until a final regulatory structure has been adopted.

Retail Gasoline Stations

We currently operate gasoline stations in three states with underground petroleum product storage tanks and in the past have operated gasoline stations that are now closed. Federal and state statutes and regulations govern the installation, operation and removal from service of these underground storage tanks and associated piping and product dispensing systems. The operation of underground storage tanks and systems carries the risk of contamination to soil and groundwater with petroleum products. We manage this risk by promptly responding to actual and suspected leaks and spills and implementing remedial action plans meeting regulatory requirements. In addition to prompt response and remediation, we receive reimbursement for response costs associated with leaks and spills in the Commonwealth of Pennsylvania through the Underground Storage Tank Indemnification Fund.

Competition

Our primary market area is western New York and northwestern Pennsylvania and our core market area encompasses our Warren County base and the eight contiguous counties in New York and Pennsylvania. The principal competitive factors affecting our wholesale marketing business are the price and quality of our products, as well as the reliability and availability of supply and the location of multiple distribution points.

Petroleum refining is highly competitive. With respect to wholesale gasoline and distillate sales, we compete with Sunoco, Valero, Exxon-Mobil, and other refiners and marketers via the pipeline system. We primarily compete with Marathon Petroleum in the asphalt market, both in New York and Pennsylvania. Many of our principal competitors are integrated multinational oil companies that are substantially larger and better known than us. Because of their diversity, integration of operations, larger capitalization and greater resources, these major oil companies may be better able to withstand volatile market conditions, compete on the basis of price and more readily obtain crude oil in times of shortages.

The principal competitive factors affecting our refining operations are crude oil and other feedstock costs, refinery efficiency, refinery product mix and product distribution and transportation costs. Certain of our larger competitors have refineries, which are larger and more complex and, as a result, could have lower per barrel costs or higher margins per barrel of throughput. We have no crude oil reserves and are not engaged in exploration. We believe that we will continue to be able to obtain adequate crude oil and other feedstocks at generally competitive prices for the foreseeable future.

It is our view that the high construction costs and the stringent regulatory requirements inherent in petroleum refinery operations make it uneconomical for new competing refineries to be constructed in our primary market area. The nearest fuels refinery is over 160 miles from Warren, Pennsylvania and we believe that no significant production from such refinery is currently shipped into our primary market area. In addition, four refineries in PADD I were forced to shut down during the recent economic downturn. We believe this capacity rationalization should improve overall utilization by remaining refineries in PADD I, including us, and result in improved margins as demand improves.

The principal competitive factors affecting our retail marketing network are location, product price, overall appearance and cleanliness of stores and brand identification. Competition from large, integrated oil companies,

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supermarkets, and “big box” convenience store chains such as Wal-Mart and Sam’s Club, is expected to be ongoing. The principal competitive factors affecting our wholesale marketing business are the price and quality of our products, as well as the reliability and availability of supply and the location of multiple distribution points.

Employees

As of August 31, 2012, we had approximately 4,344 employees; 1,912 full-time and 2,432 part-time employees. Approximately 3,804 persons were employed at our retail units, 337 persons at our refinery, Kiantone Pipeline and at terminals operated by us, with the remainder at our office in Warren, Pennsylvania. We have entered into collective bargaining agreements with International Union of Operating Engineers Local No. 95, United Steel Workers of America Local No. 2122-A and General Teamsters Local Union No. 397 covering 234, 6, and 21 employees, respectively. The agreements expire on February 1, 2017, January 31, 2017 and July 31, 2014, respectively. We believe that our relationship with our employees is good.

Intellectual Property

We own various federal and state service and trademarks used by us, including Kwik Fill^®, United^®, Country Fair^®, SuperKwik^®, Keystone^®, SubFare^® and PizzaFare^®. Our subsidiary, Country Fair, and we have licensing agreements with Citgo Petroleum Corporation (“Citgo”) for the right to use Citgo’s applicable brand names, trademarks and other forms of Citgo’s identification for petroleum products purchased under a distributor franchise agreement.

We have obtained the right to use the Red Apple Food Mart^® service mark to identify our retail units under a royalty-free, nonexclusive, nontransferable license from Red Apple Supermarkets, Inc., a corporation which is indirectly wholly owned by John A. Catsimatidis, the indirect sole stockholder, Chairman of the Board and Chief Executive Officer of the Company. The license is for an indefinite term. The licensor has the right to terminate this license in the event that we fail to maintain quality acceptable to the licensor. We license the right to use the Keystone^® trademark to approximately 44 independent distributors on a non-exclusive royalty-free basis.

We currently do not own any material patents. Management believes that the Company does not infringe upon the patent rights of others, nor does our lack of patent ownership impact our business in any material manner.

Governmental Approvals

We believe we have obtained all necessary governmental approvals, licenses, and permits to operate the refinery and convenience stores.

Financing

On February 22, 2011 the Company announced the launch of a cash tender offer (the “Tender Offer”) for any and all of its outstanding Senior Notes due 2012 issued under an indenture dated as of August 6, 2004 (the “2012 Indenture”) and consent solicitation (the “Solicitation”) for certain proposed amendments to the 2012 Indenture (the “Proposed Amendments”). Each holder who validly tendered its Senior Notes due 2012 and delivered consents to the Proposed Amendments prior to 5:00 pm, New York City time, on March 7, 2011, (the “Consent Date”), received the total consideration of $1,005, which included $975 as the tender offer consideration and $30 as a consent payment. In addition, accrued but unpaid interest up to, but not including, the applicable payment date of the Senior Notes due 2012 was paid in cash on all validly tendered and accepted the Senior Notes due 2012. The Company paid a total of $188,607,726 on March 8, 2011 for $181,764,375 principal amount of the Senior Notes due 2012, $5,592,750 for consent payment (which is included in interest expense, net and financing costs), and $1,250,601 for accrued interest on those Senior Notes due 2012 tendered.

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The Tender Offer expired at 12:00 midnight, New York City time, on March 21, 2011. Holders who validly tendered their Senior Notes due 2012 after the Consent Date received only the tender offer consideration and were not entitled to receive a consent payment pursuant to the Tender Offer. The Company paid the total consideration or tender offer consideration, as the case may be, plus accrued but unpaid interest, for the Senior Notes due 2012 accepted for purchase promptly following the date of such acceptance (such date, the “Final Payment Date”). On March 22, 2011, the Company paid a total of $678,225 for $670,800 principal amount of the Senior Notes due 2012 and $7,425 for accrued interest on those Senior Notes due 2012 tendered between the Consent Date (March 7, 2011) and the Final Payment Date (March 21, 2011).

On March 8, 2011, the Company sold $365,000,000 of 10.500% First Priority Senior Secured Notes due 2018 (the “Senior Secured Notes due 2018”) for $352,020,600, resulting in original issue discount of $12,979,400, which will be amortized over the life of the Senior Secured Notes due 2018 using the interest method. The net proceeds of the offering of $344,249,000 were used to fund the cash tender offer for all of its outstanding 10 ¹/₂% Senior Notes due 2012 (the “Senior Notes due 2012”), pay accrued interest of $3,400,000 and a redemption premium related thereto. A loss of $1,245,000 on the early extinguishment of debt was recorded consisting of a redemption premium of $915,000, a write-off of unamortized net debt premium of $1,153,000 and a write-off of deferred financing costs of $1,483,000. The Senior Secured Notes due 2018 are guaranteed on an unsecured basis by all of our domestic subsidiaries existing at March 8, 2011. The Senior Secured Notes due 2018 are secured on a first-priority basis by our assets comprising our refinery located in Warren, Pennsylvania and the capital stock of our pipeline subsidiary, subject to permitted liens. The Senior Secured Notes will rank equally with all of our existing and future senior indebtedness that is not subordinate in right of payment to the Senior Secured Notes due 2018.

On March 9, 2011, the Company issued a Notice of Redemption to all holders of its 10 ¹/₂% Senior Notes due 2012 redeeming these Senior Notes due 2012 at 100% par value plus accrued but unpaid interest on the redemption date of April 8, 2011. On April 8, 2011, $138,962,427 was paid in total, of which $136,847,000 was for principal amount of Senior Notes due 2012 and $2,115,427 was for accrued interest.

In May 2011, we entered into an amended and restated Revolving Credit Facility (“Amended and Restated Revolving Credit Facility”) with PNC Bank, National Association, as Administrator (“the Agent”) increasing the maximum facility commitment from $130,000,000 to $175,000,000 and extending the term to May 18, 2016. This amendment provides the Company greater flexibility relative to its cash flow requirements in light of market fluctuations, particularly involving crude oil prices and seasonal business cycles. The improved liquidity resulting from the expansion of the facility will assist the Company in meeting its working capital, ongoing capital expenditure needs and for general corporate purposes. The amendment to the Revolving Credit Facility affected certain terms and provisions thereof including an increase in the interest rate. Under the new amendment to the Revolving Credit Facility effective May 31, 2011, the applicable margin will continue to be calculated on the average unused availability as follows: (a) for base rate borrowing, at the greater of the Agent Bank’s prime rate plus an applicable margin of 0.5% to 0%; the Federal Funds Open Rate plus 0.5%; or the Daily LIBOR rate plus 1%; plus the applicable margin of 1.25% to 1.75% and (b) for euro-rate based borrowings, at the LIBOR Rate plus an applicable margin of 2.75% to 3.25%. The applicable margin varies with our facility leverage ratio calculation. The Agent Bank’s prime rate at August 31, 2012 was 3.25%.

The Amended and Restated Revolving Credit Facility is secured primarily by certain cash accounts, accounts receivable and inventory. Until maturity, we may borrow on a borrowing base formula as set forth in the facility. We had outstanding letters of credit of $6,533,000 as of August 31, 2012. As of August 31, 2012, we had no outstanding borrowings under the Revolving Credit Facility resulting in net availability of $168,467,000.

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ITEM 1A. RISK FACTORS.

Risks Relating to the Business

Our ability to pay interest and principal on the Senior Secured Notes due 2018 and to satisfy our other debt obligations will depend upon our future operating performance, which will be affected by prevalling economic conditions and financial, business and other factors, most of which are beyond our control.

Our ability to pay interest and principal on the Senior Secured Notes due 2018 and to satisfy our other debt obligations will depend upon our future operating performance, which will be affected by prevailing economic conditions and financial, business and other factors, most of which are beyond our control. We anticipate that our operating cash flow, together with borrowings under the Revolving Credit Facility, will be sufficient to meet our operating expenses and capital expenditures, to sustain operations and to service our interest requirements as they become due.

The Company’s 10.5% Senior Secured Notes mature in 2018, at which time the Company will either have to pay the principal amount in full or refinance the Notes.

We use our Revolving Credit Facility to finance a portion of our operations. These on-balance sheet financial instruments, to the extent they provide for variable rates, expose us to interest rate risks resulting from changes in the PNC Prime rate, the Federal Funds rate or the LIBOR rate.

If we are unable to generate sufficient cash flow to service our indebtedness and fund our capital expenditures, we will be forced to adopt an alternative strategy that may include reducing or delaying capital expenditures, selling assets, restructuring or refinancing our indebtedness (including the notes) or seeking additional equity capital. There can be no assurance that any of these strategies could be affected on satisfactory terms, if at all. Our ability to meet our debt service obligations will be dependent upon our future performance which, in turn, is subject to future economic conditions and to financial, business and other factors, many of which are beyond our control.

The price volatility of crude oil, other feedstocks, refined petroleum products and fuel and utility services may have a material adverse effect on our earnings, cash flows and liquidity.

Our refining earnings, cash flows and liquidity from operations depend primarily on the margin above operating expenses (including the cost of refinery feedstocks, such as crude oil and natural gas liquids that are processed and blended into refined products) at which we are able to sell refined products. Refining is primarily a margin-based business and, to increase earnings, it is important to maximize the yields of high value finished products while minimizing the costs of feedstock and operating expenses. When the margin between refined product prices and crude oil and other feedstock costs contracts, our earnings, and cash flows are negatively affected. Refining margins historically have been volatile, and are likely to continue to be volatile, as a result of a variety of factors, including fluctuations in the prices of crude oil, other feedstocks, refined products and fuel and utility services. While an increase or decrease in the price of crude oil may result in a similar increase or decrease in prices for refined products, there may be a time lag in the realization of the similar increase or decrease in prices for refined products. The effect of changes in crude oil prices on our refining margins therefore depends in part on how quickly and how fully refined product prices adjust to reflect these changes.

In addition, the nature of our business requires us to maintain substantial refined product inventories. Because refined products are commodities, we have no control over the changing market value of these inventories. Our refined product inventory is valued at the lower of cost or market value under the last-in, first-out (“LIFO”), inventory valuation methodology. If the market value of our refined product inventory were to decline to an amount less than our LIFO cost, we would record a write-down of inventory and a non-cash charge to cost of sales.

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Prices of crude oil, other feedstocks and refined products depend on numerous factors beyond our control, including the supply of and demand for crude oil, other feedstocks, gasoline, diesel, asphalt and other refined products. Such supply and demand are affected by, among other things:

• changes in global and local economic conditions;

• domestic and foreign demand for fuel products, especially in the United States, China and India;

• worldwide political conditions, particularly in significant oil producing regions such as the Middle East, West Africa and Latin America;

• the level of foreign and domestic production of crude oil and refined products and the volume of crude oil, feedstock and refined products imported into the United States;

• availability of and access to transportation infrastructure;

• utilization rates of U.S. refineries;

• the ability of the members of the Organization of Petroleum Exporting Countries (“OPEC”) to affect oil prices and maintain production controls;

• development and marketing of alternative and competing fuels;

• commodities speculation;

• natural disasters (such as hurricanes and tornadoes), accidents, interruptions in transportation, inclement weather or other events that can cause unscheduled shutdowns or otherwise adversely affect our refinery;

• federal and state government regulations and taxes; and

• local factors, including market conditions, weather conditions and the level of operations of other refineries and pipelines in our markets.

Our direct operating expense structure also impacts our earnings. Our major direct operating expenses include employee and contract labor, maintenance and energy costs. Our predominant variable direct operating cost is energy, which is comprised primarily of fuel and other utility services. The volatility in costs of fuel, principally natural gas, and other utility services, principally electricity, used by our refinery and other operations affect our operating costs. Fuel and utility prices have been, and will continue to be, affected by factors outside our control, such as supply and demand for fuel and utility services in both local and regional markets. Natural gas prices have historically been volatile and, typically, electricity prices fluctuate with natural gas prices. Future increases in fuel and utility prices may have a negative effect on our earnings and cash flows.

Volatility in refined product prices also affects our borrowing base under our revolving credit facility. A decline in prices of our refined products reduces the value of our refined product inventory collateral, which, in turn, may reduce the amount available for us to borrow under our revolving credit facility.

Our results of operations are affected by crude oil differentials, which may fluctuate substantially.

Our results of operations are affected by crude oil differentials, which may fluctuate substantially. Since 2010, refined product prices have been more correlated to prices of Brent crude oil (“Brent”) than to NYMEX WTI, the traditional U.S. crude oil benchmark, as the discount to which a barrel of NYMEX WTI traded relative to a barrel of Brent has widened significantly relative to historical levels. This differential has also been very volatile as a result of various continuing geopolitical events.

We are subject to interruptions of supply and distribution as a result of our reliance on pipelines for our supply of crude oil. Prolonged disruption to the Enbridge Pipeline or the Kiantone Pipeline may have a material adverse effect on our business, results of operations or financial condition.

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Our refinery receives substantially all of its crude oil through pipelines. We could experience an interruption of supply, or an increased cost of receiving crude oil, if the ability of these pipelines to transport crude oil or blendstocks is disrupted because of accidents, weather interruptions, governmental regulation, terrorism, other third party action or any of the types of events described in the preceding risk factor.

We obtain substantially all of our crude oil supply through pipelines owned and operated by Enbridge Energy Partner (“Enbridge Pipeline”), and the Kiantone Pipeline, which we own and operate. Any prolonged disruption to the operations of our refinery, the Enbridge Pipeline or the Kiantone Pipeline, whether due to labor difficulties, destruction of or damage to such facilities, severe weather conditions, interruption of utilities service or other reasons, would have a material adverse effect on our business, results of operations or financial condition. Further, our property and business interruption insurance may not compensate us adequately for any losses that occur.

In addition, due to the common carrier regulatory obligation applicable to interstate oil pipelines, capacity must be prorated among shippers in an equitable manner in accordance with the tariff then in effect in the event there are nominations in excess of capacity. Therefore, nominations by new shippers or increased nominations by existing shippers may reduce the capacity available to us with respect to the Enbridge pipeline system. Any prolonged interruption in the operation or curtailment of available capacity of the pipelines that we rely upon for transportation of crude oil could have a material adverse effect on our business, financial condition, results of operations and cash flows and, as a result, our ability to make distributions.

The dangers inherent in our operations could cause disruptions and could expose us to potentially significant losses, costs or liabilities and reduce our liquidity. We are particularly vulnerable to disruptions in our operations because all of our refining operations are conducted at a single facility.

Our operations are subject to significant hazards and risks inherent in refining operations and in transporting and storing crude oil, intermediate products and refined products. These hazards and risks include, but are not limited to, natural disasters, fires, explosions, pipeline ruptures and spills, third party interference and mechanical failure of equipment at our facilities, any of which could result in production and distribution difficulties and disruptions, pollution (such as oil spills, etc.), personal injury or wrongful death claims and other damage to our properties and the property of others.

There is also risk of mechanical failure and equipment shutdowns both in the normal course of operations and following unforeseen events. In such situations, undamaged refinery processing units may be dependent on, or interact with, damaged process units and, accordingly, are also subject to being shut down.

Because all of our refining operations are conducted at a single refinery, any of such events at our refinery could significantly disrupt our production and distribution of refined products. Any sustained disruption would have a material adverse effect on our business, financial condition, results of operations and cash flows and, as a result, our ability to make distributions.

Our suppliers source substantially all of our crude oil from Canada and the northern plain states and may experience interruptions of supply from those regions.

Our suppliers source substantially all of our crude oil from Canada and the northern plain states. As a result, we may be disproportionately exposed to the impact of delays or interruptions of supply from those regions caused by transportation capacity constraints, curtailment of production, unavailability of equipment, facilities, personnel or services, significant governmental regulation, natural disasters, adverse weather conditions, plant closures for scheduled maintenance or interruption of transportation of oil or natural gas produced from the wells in those areas.

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Competition from companies having greater financial and other resources than we do could materially and adversely affect our business and results of operations.

Our refining operations compete with domestic refiners and marketers in the PADD I region of the United States, as well as with domestic refiners in other PADD regions and foreign refiners that import products into the United States. In addition, we compete with producers and marketers in other industries that supply alternative forms of energy and fuels to satisfy the requirements of our industrial, commercial and individual customers. Certain of our competitors have larger, more complex refineries, and may be able to realize lower per-barrel costs or higher margins per barrel of throughput. Several of our principal competitors are integrated national or international oil companies that are larger and have substantially greater resources than we do and have access to proprietary sources of controlled crude oil production. Unlike these competitors, we obtain substantially all of our feedstocks from unaffiliated sources. Because of their integrated operations and larger capitalization, these companies may be more flexible in responding to volatile industry or market conditions, such as shortages of crude oil supply and other feedstocks or intense price fluctuations.

Newer or upgraded refineries will often be more efficient than our refinery, which may put us at a competitive disadvantage. While we have taken significant measures to maintain and upgrade units in our refinery by installing new equipment and repairing equipment to improve our operations, these actions involve significant uncertainties, since upgraded equipment may not perform at expected throughput levels, the yield and product quality of new equipment may differ from design specifications and modifications may be needed to correct equipment that does not perform as expected. Any of these risks associated with new equipment, redesigned older equipment or repaired equipment could lead to lower revenues or higher costs or otherwise have an adverse effect on future results of operations and financial condition and our ability to make distributions. Over time, our refinery may become obsolete, or be unable to compete, because of the construction of new, more efficient facilities by our competitors.

We may incur significant liability under, or costs and capital expenditures to comply with, environmental, health and safety regulations, which are complex and change frequently.

Our refinery and pipelines operations are subject to federal, state and local laws regulating, among other things, the generation, storage, handling, use, treatment and transportation of petroleum and hazardous substances, the emission and discharge of materials into the environment, waste management, characteristics and composition of gasoline and diesel and other matters otherwise relating to the protection of the environment. Our operations are also subject to various laws and regulations relating to occupational health and safety. Compliance with the complex array of federal, state and local laws relating to the protection of the environment, health and safety is difficult and likely will require us to make significant expenditures. Moreover, our business is inherently subject to accidental spills, discharges or other releases of petroleum or hazardous substances into the environment including at neighboring areas or third party storage, treatment or disposal facilities. Certain environmental laws impose joint and several liability without regard to fault or the legality of the original conduct in connection with the investigation and cleanup of such spills, discharges or releases. As such, we may be required to pay more than our fair share of such investigation or cleanup. We may not be able to operate in compliance with all applicable environmental, health and safety laws, regulations and permits at all times. Violations of applicable legal or regulatory requirements could result in substantial fines, criminal sanctions, permit revocations, injunctions and/or facility shutdowns. We may also be required to make significant capital expenditures or incur increased operating costs or change operations to achieve compliance with applicable standards.

We cannot predict what additional environmental, health and safety legislation or regulations will be enacted or become effective in the future or how existing or future laws or regulations will be administered or interpreted with respect to our operations. Many of these laws and regulations are becoming increasingly stringent, and the cost of compliance with these requirements can be expected to increase over time. For example, on June 1, 2012, the U.S. Environmental Protection Agency (“EPA”) issued final amendments to the

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New Source Performance Standards (“NSPS”) for petroleum refineries, including standards for emissions of nitrogen oxides from process heaters and work practice standards and monitoring requirements for flares. We are evaluating the regulation and amended standards, as may be applicable to the flare, process heaters and operations at our refinery. We cannot currently predict the costs that we may have to incur, if any, to comply with the amended NSPS, but costs could be material. In addition, the EPA has announced that it plans to propose new “Tier 3” motor vehicle emission and fuel standards sometime in the second half of 2012. It has been reported that these new Tier 3 regulations may, among other things, lower the maximum average sulfur content of gasoline from 30 parts per million to 10 parts per million. If the Tier 3 regulations are eventually implemented and lower the maximum allowable content of sulfur or other constituents in fuels that we produce, we may at some point in the future be required to make significant capital expenditures and/or incur materially increased operating costs to comply with the new standards. Expenditures or costs for environmental, health and safety compliance could have a material adverse effect on our results of operations, financial condition and profitability and, as a result, our ability to make distributions.

Compliance with and changes in tax laws could adversely affect our performance.

We are subject to extensive tax liabilities, including federal, state and transactional taxes such as excise, sales/use, payroll, franchise, withholding and ad valorem taxes. New tax laws and regulations and changes in existing tax laws and regulations are continuously being enacted or proposed that could result in increased expenditures for tax liabilities in the future. There can be no certainty of the effect that increases in taxes, or imposition of new taxes, could have on us, or whether such taxes would be passed on to our customers. Certain of these liabilities are subject to periodic audits by the respective taxing authority, which could increase our tax liabilities. Subsequent changes to our tax liabilities as a result of these audits may also subject us to interest and penalties.

A decrease in government funding for paving activity could lead to a decrease in demand for asphalt, which could materially adversely affect refining margins.

In fiscal 2012, asphalt sales represented 18% of our total revenues. Over the same period, approximately 88% of our asphalt was produced for use in paving or repaving roads and highways. The level of paving activity is, in turn, dependent upon funding available from federal, state and local governments. Funding for paving has been affected in the past, and may be affected in the future, by budget difficulties at the federal, state or local levels. A decrease in demand for asphalt could cause us to sell asphalt at significantly lower prices or to curtail production of asphalt by processing more costly lower sulfur content crude oil which would adversely affect refining margins.

We have an indirect controlling stockholder.

John A. Catsimatidis indirectly owns all of our outstanding voting stock. By virtue of such stock ownership, Mr. Catsimatidis has the power to control all matters submitted to our stockholder and to elect all of our directors.

Our Pension Plans are Currently Underfunded.

Substantially all of our employees are covered by three noncontributory defined benefit pension plans. As of August 31, 2012, as measured under ASC 715 (which is not the same as the measure used for purposes of calculating required contributions and potential liability to the Pension Benefit Guaranty Corporation, or PBGC), the aggregate accumulated benefit obligation under our pension plans was approximately $116.3 million and the value of the assets of the plans was approximately $72.4 million. In fiscal 2012, we contributed $5.7 million to the three plans, and we have made additional contributions to our pension plans of $2.2 million in fiscal year 2013. If the performance of the assets in our pension plans does not meet our expectations or if other actuarial assumptions are modified, our contributions for future years could be higher than we expect.

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In June 2010, the Company announced changes to the healthcare and pension plans provided to salaried employees. Effective September 1, 2010, postretirement medical benefits for new hires and active salaried employees retiring after September 1, 2010 were eliminated. Additionally, effective January 1, 2011, deductibles and co-payments were added to the medical benefits plan for all active and retired employees. For salaried employees meeting certain age and service requirements, the Company will contribute a defined dollar amount towards the cost of retiree healthcare based upon the employee’s length of service. Similarly, effective August 31, 2010, benefits under the Company’s defined benefit pension plan were frozen for all salaried employees, including the Company’s Chief Executive Officer and Chief Financial Officer. The Company will provide an enhanced contribution under its defined contribution 401(k) plan as well as a transition contribution for older employees. The changes made for the salary group described above were also incorporated into the collective bargaining agreement reached with the International Union of Operating Engineers, Local No. 95 effective February 1, 2012.

Our pension plans are subject to the Employee Retirement Income Security Act of 1974, or ERISA. Under ERISA, the PBGC generally has the authority to terminate an underfunded pension plan if the possible long-run loss of the PBGC with respect to the plan may reasonably be expected to increase unreasonably if the plan is not terminated. In the event our pension plans are terminated for any reason while the plans are underfunded, we will incur a liability to the PBGC that may be equal to the entire amount of the underfunding.

Risks Relating to Senior Secured Notes due 2018 and Revolving Credit Facility.

The indenture governing our senior secured notes and our revolving credit facility contain certain covenants that may inhibit our ability to make certain investments, incur certain additional indebtedness and engage in certain other transactions, which could adversely affect our ability to pursue our business strategies.

The indenture governing our senior secured notes and our revolving credit facility contain a number of restrictive covenants that impose significant operating and financial restrictions on us and may limit our ability to engage in acts that may be in our long-term best interest, including restrictions on our ability, among other things, to:

• incur, assume or guarantee additional debt or issue redeemable stock or preferred stock;

• make distributions or prepay, redeem, or repurchase certain debt;

• enter into agreements that restrict distributions from restricted subsidiaries;

• incur liens;

• sell or otherwise dispose of assets, including capital stock of subsidiaries;

• enter into new lines of business;

• enter into transactions with affiliates; and

• merge, consolidate or sell substantially all of our assets.

A breach of the covenants under the indenture governing the senior secured notes or under the credit agreement governing the revolving credit facility could result in an event of default under the applicable indebtedness. Such default may allow the creditors to accelerate the related debt and may result in the acceleration of any other debt to which a cross-acceleration or cross-default provision applies. In addition, an event of default under our revolving credit facility would permit the lenders under our revolving credit facility to terminate all commitments to extend further credit under that facility. Furthermore, if we were unable to repay the amounts due and payable under our revolving credit facility or indenture, those creditors could proceed against the collateral granted to them to secure that indebtedness.

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In the event our lenders or noteholders accelerate the repayment of our borrowings, we may not have sufficient assets to repay that indebtedness. As a result of these restrictions, we may be:

• limited in how we conduct our business;

• unable to raise additional debt or equity financing to operate during general economic or business downturns; or

• unable to compete effectively or to take advantage of new business opportunities.

The Senior Secured Notes due 2018 are secured by certain assets of the Company and a foreclosure on such liens could adversely affect our business.

The Senior Secured Notes due 2018 are secured by a pledge of the stock of our subsidiary Kiantone Pipeline Corporation and, subject to certain exceptions, by a mortgage lien on and a security interest in the assets comprising the refinery. In case of a continuing event of default by the Company, the collateral agent may exercise all rights of a mortgagee and/or secured party under applicable law, including, without limitation, transferring to itself or a nominee title to such collateral, which could adversely affect our business.

We may issue additional notes and enter into hedging activities that would be secured by the same collateral securing the Senior Secured Notes due 2018.

Subject to the covenants and conditions contained in the indenture, we are permitted to issue additional notes and enter into hedging obligations secured by a lien that ranks equally with the Senior Secured Notes due 2018. In addition, the estimated net book value of the collateral is substantially less than the outstanding aggregate principal amount of the Senior Secured Notes due 2018 and the mortgage on the refinery is limited to a stated maximum principal amount of $450 million. To the extent that the Senior Secured Notes due 2018, any obligations in respect of hedging arrangements and any other obligations secured by the mortgagee exceed $450 million, the principal amount of such obligations in excess of such capped amount is not secured by the mortgage. Moreover, by its nature, some or all of the collateral may be illiquid and may have no readily ascertainable market value. Any additional obligations, and the limited net book value and potential illiquidity of the collateral, may limit the recovery from the realization of the value of such collateral available to satisfy the holders of the Senior Secured Notes due 2018.

Our ability to repurchase the Senior Secured Notes due 2018 upon a change of control may be limited.

Upon the occurrence of specified change of control events, we are required to offer to repurchase all outstanding Senior Secured Notes due 2018 at 101% of the principal amount, plus accrued and unpaid interest to the date of repurchase. The lenders under the Amended and Restated Revolving Credit Facility have the right to accelerate the indebtedness thereunder upon a change of control. Any of our future debt agreements may contain similar provisions. However, we may not have sufficient funds at the time of the change of control to make the required repurchase of Senior Secured Notes due 2018 or repayment of our other indebtedness. The terms of the Amended and Restated Revolving Credit Facility also limit our ability to purchase the Senior Secured Notes due 2018 until all debt under the Amended and Restated Revolving Credit Facility is paid in full. Any of our future debt agreements may contain similar restrictions. If we fail to repurchase any Senior Secured Notes due 2018 submitted in a change of control offer, it would constitute an event of default under the indenture governing the Senior Secured Notes due 2018 which could, in turn, constitute an event of default under our other indebtedness, even if the change of control itself would not cause a default.

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ITEM 1B. UNRESOLVED STAFF COMMENTS.

Not Applicable.

ITEM 2. PROPERTIES.

We own a 107-acre site in Warren, Pennsylvania upon which we operate our refinery. The site also contains an office building housing our principal executive office.

We own various real property in the states of Pennsylvania, New York, Ohio, and Alabama, upon which, as of August 31, 2012, we operated 193 retail units and two crude oil and six refined product storage terminals. We also own the 78-mile long Kiantone Pipeline, a pipeline which connects our crude oil storage terminal to the refinery’s tank farm. Our right to maintain the pipeline is derived from approximately 265 separate easements, right-of-way agreements, leases, permits, and similar agreements. We also have easements, right-of-way agreements, leases, permits, and similar agreements that would enable us to build a second pipeline on property contiguous to the Kiantone Pipeline.

As of August 31, 2012, we also lease an aggregate of 167 sites in Pennsylvania, New York, and Ohio upon which we operate retail units.

ITEM 3. LEGAL PROCEEDINGS.

The Company and its subsidiaries are from time to time parties to various legal proceedings that arise in the ordinary course of their respective business operations. These proceedings include various administrative actions relating to federal, state and local environmental laws and regulations as well as civil matters before various courts seeking money damages. The Company believes that if the legal proceedings in which it is currently involved were determined against the Company, there would be no material adverse effect on the Company’s operations or its consolidated financial condition. In the opinion of management, all such matters are adequately covered by insurance, or if not so covered, are without merit or are of such kind, or involve such amounts that an unfavorable disposition would not have a material adverse effect on the consolidated operations or financial position of the Company.

ITEM 4. MINE SAFETY DISCLOSURES.

Not Applicable.

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.

None.

ITEM 6. SELECTED FINANCIAL DATA.

The following table sets forth certain historical financial and operating data (the “Selected Information”) as of the end of and for each of the years in the five-year period ended August 31, 2012. The selected income statement, balance sheet, financial and ratio data as of and for each of the five-years ended August 31, 2012 has been derived from our audited consolidated financial statements. The operating information for all periods presented has been derived from our accounting and financial records. The Selected Information set forth below should be read in conjunction with, and is qualified by reference to, “Management’s Discussion and Analysis of

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Financial Condition and Results of Operations” in Item 7 and our Consolidated Financial Statements and Notes thereto in Item 8 and other financial information included elsewhere herein.

	Year Ended August 31,
	2012			2011			2010			2009			2008
	(in thousands)
Income Statement Data:
Net sales	$	3,730,925		$	3,166,876		$	2,654,401		$	2,387,171		$	3,208,012
Refining operating expenses (1)		123,222			106,715			111,078			123,171			152,521
Selling, general and administrative expenses		157,581			149,456			150,825			144,943			145,770
Operating income (loss)		358,350			33,332			(78,091	)		91,468			(52,595	)
Interest expense		40,913			40,567			35,177			(36,006	)		(36,934	)
Interest income		44			17			6			134			4,966
Other, net		(4,711	)		(2,564	)		(1,518	)		(1,471	)		(3,706	)
Equity in net earnings of affiliate		—			—			—			41			2,879
(Loss) / gain on early extinguishment of debt		—			(1,245	)		—			10,096			—
Income (Loss) before income tax expense (benefit)		312,770			(11,027	)		(114,780	)		64,262			(85,390	)
Income tax expense (benefit)		121,954			(3,619	)		(38,646	)		26,235			(35,485	)
Net income (loss)		190,816			(7,408	)		(76,134	)		38,027			(49,905	)
Less net income attributable to non-controlling interest		—			711			—			—			—
Net income (loss) attributable to United Refining Company’s stockholder		190,816			(8,119	)		(76,134	)		38,027			(49,905	)
Balance Sheet Data (at end of period):
Total assets		728,330			670,611			637,103			670,854			601,793
Total debt		359,996			381,087			413,053			331,576			367,291
Total stockholder’s equity		141,276			20,753			26,237			70,814			58,058

(1) Refinery operating expenses include refinery fuel produced and consumed in refinery operations.

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

Forward Looking Statements

This Annual Report on Form 10-K contains certain statements that constitute “forward looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These forward looking statements may include, among other things, United Refining Company and its subsidiaries current expectations with respect to future operating results, future performance of its refinery and retail operations, capital expenditures and other financial items. Words such as “expects”, “intends”, “plans”, “projects”, “believes”, “estimates”, “may”, “will”, “should”, “shall”, “anticipates”, “predicts”, and similar expressions typically identify such forward looking statements in this Annual Report on Form 10-K.

By their nature, all forward looking statements involve risk and uncertainties. All phases of the Company’s operations involve risks and uncertainties, many of which are outside of the Company’s control, and any one of which, or a combination of which, could materially affect the Company’s results of operations and whether the forward looking statements ultimately prove to be correct. Actual results may differ materially from those contemplated by the forward looking statements for a number of reasons.

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Although we believe our expectations are based on reasonable assumptions within the bounds of its knowledge, investors and prospective investors are cautioned that such statements are only projections and that actual events or results may differ materially depending on a variety of factors described in greater detail in the Company’s filings with the SEC, including quarterly reports on Form 10-Q, annual reports on Form 10-K, current reports on Form 8-K, etc. In addition to the factors discussed elsewhere in this Annual Report 10-K, the Company’s actual consolidated quarterly or annual operating results have been affected in the past, or could be affected in the future, by additional factors, including, without limitation:

• general economic, business and market conditions;

• repayment of debt;

• the effect of the current banking and credit crisis on the Company and our customers and suppliers;

• risks and uncertainties with respect to the actions of actual or potential competitive suppliers of refined petroleum products in our markets;

• the demand for and supply of crude oil and refined products;

• the spread between market prices for refined products and market prices for crude oil;

• the possibility of inefficiencies or shutdowns in refinery operations or pipelines;

• the availability and cost of financing to us;

• environmental, tax and tobacco legislation or regulation;

• volatility of gasoline prices, margins and supplies;

• merchandising margins;

• labor costs;

• level of capital expenditures;

• customer traffic;

• weather conditions;

• acts of terrorism and war;

• business strategies;

• expansion and growth of operations;

• future projects and investments;

• expected outcomes of legal and administrative proceedings and their expected effects on our financial position, results of operations and cash flows;

• future operating results and financial condition; and

• the effectiveness of our disclosure controls and procedures and internal control over financial reporting.

All subsequent written and oral forward looking statements attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by the foregoing. We undertake no obligation to update any information contained herein or to publicly release the results of any revisions to any such forward looking statements that may be made to reflect events or circumstances that occur, or which we become aware of, after the date of this Annual Report on Form 10-K.

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Business Strategy and Overview

Our primary business objective is to strengthen our position as a leading producer and marketer of high quality refined petroleum products within our market area. We plan to accomplish this strategy through continued attention to optimizing our operations, resulting in the lowest possible operating costs, and continuing to improve and enhance our retail and wholesale positions. More specifically, we intend to:

• Maximize the favorable economic impact of our transportation cost advantage by increasing our retail and wholesale market shares within our market area.

• Optimize profitability by managing feedstock costs, product yields, and inventories through our refinery feedstock management program and our system-wide distribution model. We seek to maximize refinery profitability by selecting crude oil and other feedstocks taking into account product demand and pricing in our market areas, price, quality and availability of various grades of crude oil, product inventory levels and planned turnarounds of refinery units for maintenance. The combination of these factors is optimized by a sophisticated proprietary linear programming computer model, which selects the most profitable feedstock and product mix. The linear programming model is continuously updated and improved to reflect changes in the product market place and in our refinery’s processing capability

• Continue to investigate strategic acquisitions.

• Develop high payback discretionary capital improvements to our existing facilities.

Critical Accounting Policies

The accompanying consolidated financial statements and supplementary information were prepared in accordance with accounting principles generally accepted in the United States of America. Significant accounting policies are discussed in Note 1 to the Consolidated Financial Statements, Item 8. Inherent in the application of many of these accounting policies is the need for management to make estimates and judgments in the determination of certain revenues, expenses, assets and liabilities. As such, materially different financial results can occur as circumstances change and additional information becomes known. The policies with the greatest potential effect on our results of operation and financial position include:

Revenue Recognition

Revenues for products sold by the wholesale segment are recorded upon delivery of the products to our customers, at which time title to those products is transferred and when payment has either been received or collection is reasonably assured. At no point do we recognize revenue from the sale of product prior to transfer of its title. Title to product is transferred to the customer at the shipping point, under predetermined contracts for sale at agreement upon or posted prices to customers of which collectability is reasonably assured.

Revenues for products sold by the retail segment are recognized immediately upon sale to the customer. Revenue derived from other sources including freight charges are recognized when the related product revenue is recognized.

Collectability of Accounts Receivable

For accounts receivable we estimate the net collectability considering both historical and anticipated trends relating to our customers and the possibility of non-collection due to their financial position. While such non-collections have been historically within our expectations and the allowances the Company has established, the Company cannot guarantee that it will continue to experience non-collection rates that it has experienced in the past. A significant change in the financial position of our customers could have a material impact on the quality of our accounts receivable and our future operating results.

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Goodwill and Other Non-Amortizable Assets

In accordance with ACS 350, goodwill and intangible assets deemed to have indefinite lives are no longer amortized but are subject to annual impairment tests. We assess the impairment of goodwill and other indefinite-lived intangible assets annually.

The Company performed separate impairment tests on June 1, 2012 for its tradename and other intangible assets using discounted and undiscounted cash flow methods, respectively. The fair value of the tradename and other intangible assets exceeded their respective carrying values. The Company has noted no subsequent indication that would require testing the tradename and intangible assets for impairment.

There were no material changes in the gross carrying amounts of goodwill, tradename, or other intangible assets for fiscal 2012.

Long-Lived Assets

Whenever events or changes in circumstances indicate that the carrying value of any of these assets may not be recoverable, the Company will assess the recoverability of such assets based upon estimated undiscounted cash flow forecasts. When any such impairment exists, the related assets will be written down to fair value.

Value of Pension Assets

The Company maintains three noncontributory defined benefit retirement plans for substantially all its employees. The assets of the plans are invested with a financial institution that follows an investment policy drafted by the Company. The investment guidelines provide a percentage range for each class of assets to be managed by the financial institution. The historic performance of these asset classes supports the Company’s expected return on the assets. The asset classes are rebalanced periodically should they fall outside the range allocations.

The percentage of total asset allocation range is as follows:

Asset Class	Minimum			Maximum
Equity		55	%		75	%
Fixed Income		20	%		30	%
Alternative Investments		0	%		12	%
Cash or Cash Equivalents		0	%		10	%

The discount rate utilized in valuing the benefit obligations of the plans was derived from the rate of return on high quality bonds as of August 31, 2012. Similarly, the rate of compensation utilizes historic increases granted by the Company and the industry as well as future compensation policies. See Note 10 to “Consolidated Financial Statements, Item 8”.

Environmental Remediation and Litigation Reserve Estimations

Management also makes judgments and estimates in recording liabilities for environmental cleanup and litigation. Liabilities for environmental remediation are subject to change because of matters such as changes in laws, regulations and their interpretation; the effect of additional information on the extent and nature of site contamination; and improvements in technology. Likewise, actual litigation costs can vary from estimates based on the facts and circumstance and application of laws in individual cases.

The above assessment of critical accounting policies is not meant to be an all-inclusive discussion of the uncertainties to financial results that occur from the application of the full range of the Company’s accounting policies. Materially different financial results could occur in the application of other accounting policies as well.

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Likewise, materially different results can occur upon the adoption of new accounting standards promulgated by the various rule-making bodies.

General

The Company is engaged in the refining and marketing of petroleum products. In fiscal 2012, approximately 67% and 18% of the Company’s gasoline and distillate production, respectively, was sold through the Company’s network of service stations and truck stops. The balances of the Company’s refined products were sold to wholesale customers. In addition to transportation and heating fuels, primarily gasoline and distillate, the Company is a major regional wholesale marketer of asphalt. The Company also sells convenience merchandise at convenience stores located at most of its service stations. The Company’s profitability is influenced by fluctuations in the market prices of crude oils and refined products. Although the Company’s product sales mix helps to reduce the impact of large short-term variations in crude oil price, net sales and costs of goods sold can fluctuate widely based upon fluctuations in crude oil prices. Specifically, the margins on wholesale gasoline and distillate tend to decline in periods of rapidly declining crude oil prices, while margins on asphalt, retail gasoline and distillate tend to improve. During periods of rapidly rising crude oil prices, margins on wholesale gasoline and distillate tend to improve, while margins on asphalt and retail gasoline and distillate tend to decline. Gross margins on the sale of convenience merchandise averaged 25.2% for fiscal 2012 and have been between 25.2% and 26.5% for the last five years and are essentially unaffected by variations in crude oil and petroleum products prices.

The Company includes in costs of goods sold operating expenses incurred in the refining process. Therefore, operating expenses reflect only selling, general and administrative expenses, including all expenses of the retail network, and depreciation and amortization.

Recent Developments

The Company continues to be impacted by the volatility in petroleum markets in fiscal year 2013. The lagged 3-2-1 crackspread as measured by the difference between the price of crude oil contracts traded on the NYMEX for the preceding month to the prices of NYMEX gasoline and heating oil contracts in the current trading month, have been positively affected through October. The Company uses a lagged crackspread as a margin indicator as it reflects the time period between the purchase of crude oil and its delivery to the refinery for processing. The lagged crackspread in September, the first month of fiscal 2013 averaged $33.78 as compared to an average of $39.65, for August, 2012, a decrease of $5.87 or 15%. The lagged crackspread in October weakened to $27.98 as compared to September, a decrease of $5.80 or 17%. The lagged crackspread for the month of November, calculated on November 9, 2012 was $28.08.

Through November 9, 2012, the indicated lagged crackspread for the first quarter of fiscal 2013 was $29.94, a $.64 or 2% decrease from the average for the fourth quarter of fiscal 2012. The indicated lagged crackspread for our second quarter ending February 28, 2013, calculated as of November 9, 2012 was $30.02.

As of November 12, 2012, the mark to market valuation over the remaining term of the crackspread swap contracts changed $23.6 million from an unrealized gain position of $28.8 million as of August 31, 2012 to a realized gain position of $5.2 million. See also Note 1 to the “Company’s Consolidated Financial Statements”.

Results of Operations

The Company is a petroleum refiner and marketer in its primary market area of Western New York and Northwestern Pennsylvania. Operations are organized into two business segments: wholesale and retail.

The wholesale segment is responsible for the acquisition of crude oil, petroleum refining, supplying petroleum products to the retail segment and the marketing of petroleum products to wholesale and industrial

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customers. The retail segment sells petroleum products under the Kwik Fill^®, Citgo^® and Keystone^® brand names at a network of Company-operated retail units and convenience and grocery items through Company-owned gasoline stations and convenience stores under the Red Apple Food Mart^® and Country Fair^® brand names.

A discussion and analysis of the factors contributing to the Company’s results of operations are presented below. The accompanying Consolidated Financial Statements and related Notes (See Item 8), together with the following information, are intended to supply investors with a reasonable basis for evaluating the Company’s operations, but should not serve as the only criteria for predicting the Company’s future performance.

Retail Operations

	Fiscal Year Ended August 31,
	2012			2011			2010
	(in thousands)
Net Sales
Petroleum	$	1,448,009		$	1,360,106		$	1,100,399
Merchandise and other		278,038			263,662			258,647
Total Net Sales	$	1,726,047		$	1,623,768		$	1,359,046
Costs of Goods Sold	$	1,574,474		$	1,485,264		$	1,221,079
Selling, general and administrative expenses		132,408			132,475			128,017
Depreciation an amortization expenses		5,691			5,340			5,480
Segment Operating Income	$	13,474		$	689		$	4,470
Retail Operating Data:
Petroleum Sales (thousands of gallons)		393,157			396,273			393,831
Petroleum margin (a)	$	81,406		$	71,843		$	72,692
Petroleum margin ($/gallon) (b)		.2071			.1813			.1846
Merchandise and other margins	$	70,168		$	66,661		$	65,275
Merchandise margin (percent of sales)		25.2	%		25.3	%		25.2	%

(a) Includes the effect of intersegment purchases from our wholesale segment at prices which approximate market.

(b) Company management calculates petroleum margin per gallon by dividing petroleum gross profit by petroleum sales volumes. Management uses fuel margin per gallon calculations to compare profitability to other companies in the industry. Petroleum margin per gallon may not be comparable to similarly titled measures used by other companies in the industry.

Net Sales

2012 vs. 2011

Retail sales increased during fiscal 2012 by $102.3 million or 6.3% for the comparable period in fiscal 2011 from $1,623.8 million to $1,726.1 million. The increase was primarily due to $87.9 million in petroleum sales and $14.4 million in merchandise sales. The petroleum sales increase resulted from a 7.3% increase in retail selling prices per gallon, offset by a 3.1 million gallon or .8% decrease in retail petroleum volume. The merchandise sales increase is primarily due to increased prepared food and beverages due to promotional campaigns and increased selling prices.

2011 vs. 2010

Retail sales increased during fiscal 2011 by $264.7 million or 19.5% for the comparable period in fiscal 2010 from $1,359.1 million to $1,623.8 million. The increase was primarily due to $259.7 million in petroleum

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sales and $5.0 million in merchandise sales. The petroleum sales increase resulted from a 22.8% increase in retail selling prices per gallon, and a 2.4 million gallon or .6% increase in retail petroleum volume. The merchandise sales increase is primarily due to increased prepared food and beverages due to promotional campaigns and increased selling prices.

Costs of Goods Sold

2012 vs. 2011

Retail costs of goods sold increased during fiscal 2012 by $89.2 million or 6.0% for the comparable period in fiscal 2011 from $1,485.2 million to $1,574.4 million. The increase was primarily due to $73.6 million in petroleum purchase prices, merchandise cost of $10.9 million, fuel tax of $1.0 million, and freight cost of $3.7 million.

2011 vs. 2010

Retail costs of goods sold increased during fiscal 2011 by $264.2 million or 21.6% for the comparable period in fiscal 2010 from $1,221.0 million to $1,485.2 million. The increase was primarily due to $253.1 million in petroleum purchase prices, merchandise cost of $3.7 million, fuel tax of $5.7 million, and freight cost of $1.7 million.

Selling, General and Administrative Expenses

2012 vs. 2011

Retail Selling, General and Administrative (“SG&A”) expenses remained relatively constant during fiscal 2012 to the comparable period in fiscal 2011.

2011 vs. 2010

Retail Selling, General and Administrative (“SG&A”) expenses increased during fiscal 2011 by $4.5 million or 3.5% for the comparable period in fiscal 2010 from $128.0 million to $132.5 million. The increase was primarily due to credit/customer service costs of $2.6 million, maintenance costs of $1.4 million, payroll costs of $1.3 million, environmental costs of $.6 million and insurance/utilities/taxes of $.5 million offset by a decrease in pension/post retirement costs of $1.9 million. The decrease was primarily due to changes made in pension/post retirement benefits. Effective September 1, 2010, postretirement medical benefits for new hires and active salaried employees retiring after September 1, 2010 were eliminated. Additionally, effective January 1, 2011, deductibles and co-payments were added to the medical benefits plan for all plan participants. For salaried employees meeting certain age and service requirements, the Company will contribute a defined dollar amount towards the cost of retiree healthcare based upon the employee’s length of service. Similarly, effective September 1, 2010, benefits under the Company’s defined benefit pension plan were frozen for all salaried employees, including the Company’s Chief Executive Officer and Chief Financial Officer. The Company will provide an enhanced contribution under its defined contribution 401(k) plan for all eligible employees as well as a transition contribution for older employees.

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Wholesale Operations

	Fiscal Year Ended August 31,
	2012			2011		2010
	(in thousands)
Net Sales (a)	$	2,004,878		$	1,543,108	$	1,295,355
Costs of Goods Sold (exclusive of depreciation, amortization and (gains) losses on derivative contracts)		1,623,551			1,417,994		1,338,794
(Gains) losses on derivative contracts		(28,848	)		58,733		—
Selling, general and administrative expenses		25,173			16,981		22,808
Depreciation, amortization and asset impairments		40,126			16,757		16,314
Segment Operating Income (Loss)	$	344,876		$	32,643	$	(82,561	)

Key Wholesale Operating Statistics

	Fiscal Year Ended August 31,
	2012			2011			2010
Refinery Product Yield (thousands of barrels)
Gasoline and gasoline blendstock		10,055			8,241			9,139
Distillates		5,635			4,765			4,959
Asphalt		7,299			5,243			6,203
Butane, propane, residual products, internally produced fuel and other		2,414			2,361			2,328
Total Product Yield		25,403			20,610			22,629
% Heavy Crude Oil of Total Refinery Throughput (b)		60	%		51	%		58	%
Crude throughput (thousand barrels per day)		64.8			52.4			58.3
Product Sales (thousands of barrels) (a)
Gasoline and gasoline blendstock		6,142			5,425			5,325
Distillates		4,475			3,804			3,831
Asphalt		7,500			5,508			6,684
Other		836			758			1,137
Total Product Sales Volume		18,953			15,495			16,977
Product Sales (dollars in thousands) (a)
Gasoline and gasoline blendstock	$	726,001		$	613,499		$	453,641
Distillates		573,965			458,099			338,480
Asphalt		657,158			425,046			447,122
Other		47,754			46,464			56,112
Total Product Sales	$	2,004,878		$	1,543,108		$	1,295,355

(a) Sources of total product sales include products manufactured at the refinery located in Warren, Pennsylvania and products purchased from third parties.

(b) The Company defines “heavy” crude oil as crude oil with an American Petroleum Institute specific gravity of 26 or less.

Net Sales

2012 vs. 2011

Wholesale sales increased during fiscal 2012 by $461.8 million or 29.9% for the comparable period in fiscal 2011 from $1,543.1 million to $2,004.9 million. The increase was due to a 6.2% increase in wholesale prices and a 22.3% increase in wholesale volume.

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2011 vs. 2010

Wholesale sales increased during fiscal 2011 by $247.8 million or 19.1% for the comparable period in fiscal 2010 from $1,295.3 million to $1,543.1 million. The increase was due to a 30.5% increase in wholesale prices offset by a 8.7% decrease in wholesale volume.

Costs of Goods Sold (exclusive of depreciation, amortization and (gains) losses on derivative contracts)

2012 vs. 2011

Wholesale costs of goods sold increased during fiscal 2012 by $225.7 million or 15.9% for the comparable period in fiscal 2011 from $1,418.0 million to $1,643.7 million. The increase in wholesale costs of goods sold during this period was primarily due to an increase in cost of raw materials.

2011 vs. 2010

Wholesale costs of goods sold increased during fiscal 2011 by $79.2 million or 5.9% for the comparable period in fiscal 2010 from $1,338.8 million to $1,418.0 million. The increase in wholesale costs of goods sold during this period was primarily due to an increase in cost of raw materials.

(Gains)Losses on Derivative Contracts

2012

During fiscal year 2012, the Company recognized a $28.8 million gain in costs and expenses in its Consolidated Statements of Operations. This was attributed to net gains resulting from fair value changes of the Company’s derivative instruments. Of the $28.8 million gain, $15.0 million was realized losses and $43.8 million unrealized (gains). See also Item 7A “Quantitative and Qualitative Disclosures about Market Risk”.

As of November 12, 2012, the mark to market valuation over the remaining term of the crackspread swap contracts changed $23.6 million from an unrealized gain position of $28.8 million as of August 31, 2012 to a realized gain position of $5.2 million. See also Note 1 to the “Company’s Consolidated Financial Statements”.

2011

During fiscal year 2011, the Company recognized a $58.7 million charge to costs and expenses which was attributed to losses resulting from fair value changes of the Company’s derivative instruments. Of the $58.7 million charge, $7.3 million was realized and $51.4 million unrealized (non-cash).

Selling, General and Administrative Expenses

2012 vs. 2011

Wholesale SG&A expenses increased during fiscal 2012 by $8.2 million or 48.2% for the comparable period in fiscal 2011 from $17.0 million or 1.1% of net wholesale sales to $25.2 million or 1.3% of net wholesale sales. The increase was primarily due to additional payroll costs and professional services.

2011 vs. 2010

Wholesale SG&A expenses decreased during fiscal 2011 by $5.8 million or 25.5% for the comparable period in fiscal 2010 from $22.8 million or 1.8% of net wholesale sales to $17.0 million or 1.1% of net wholesale sales. The decrease was primarily due to changes made in pension and post-retirement benefits as discussed above. See retail SG&A discussion 2011 vs. 2010.

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Depreciation, Amortization and Asset Impairments

2012 vs. 2011

Depreciation, amortization and asset impairments increased during fiscal 2012 by $23.4 million for the comparable period for fiscal 2011 from $16.8 million to $40.1 million. This increase was due primarily to a charge of $20.1 million resulting from the write-off of certain design costs associated with the Company’s coker facility. See also Note 4 to the “Company’s Consolidated Financial Statements”.

Interest Expense, Net

2012 vs. 2011

Net interest expense (interest expense less interest income) increased during fiscal 2012 by $.3 million for the comparable period for fiscal 2011 from $40.6 million to $40.9 million. The increase was due to the principal amount of Senior Notes outstanding offset by reduced borrowing activity.

2011 vs. 2010

Net interest expense (interest expense less interest income) increased during fiscal 2011 by $5.4 million for the comparable period for fiscal 2010 from $35.2 million to $40.6 million. The increase was due to increasing the credit facility. In conjunction with the Company’s debt refinancing of the Senior Notes due 2012, the Company paid consent payments for early redemption of these notes in the amount of $5.6 million. These consent payments are included in interest expense, net for fiscal 2011.

Income Tax Expense / (Benefit)

Our fiscal 2012 and 2011 effective tax rates of approximately 39% and 33%, respectively, were a decrease from the relatively consistent tax rate of approximately 41% for fiscal 2010 and 2009, due to prior period audit adjustments and the accounting recognition of anticipated expiration of state net operating loss carry forwards, and permanent items.

Liquidity and Capital Resources

We operate in an environment where our liquidity and capital resources are impacted by changes in the price of crude oil and refined petroleum products, availability of credit, market uncertainty and a variety of additional factors beyond our control. Included in such factors are, among others, the level of customer product demand, weather conditions, governmental regulations, worldwide political conditions and overall market and economic conditions.

The following table summarizes selected measures of liquidity and capital sources:

	August 31, 2012		August 31, 2011
	(in thousands)
Cash and cash equivalents	$	137,540	$	16,660
Working capital	$	314,951	$	186,585
Current ratio		3.6		2.1
Debt	$	359,996	$	381,087

Primary sources of liquidity have been cash and cash equivalents, cash flows from operations and borrowing availability under a revolving line of credit. We believe available capital resources will be adequate to meet our working capital, debt service, and capital expenditure requirements for existing operations. We continuously evaluate our capital budget; however, management does not foresee any significant increase in maintenance and non-discretionary capital expenditures during fiscal 2013 that would impact future liquidity or capital resources.

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Maintenance and non-discretionary capital expenditures have averaged approximately $6 million annually over the last three years for the refining and marketing operations and management currently projects this capital expenditure to be approximately $8-$10 million for fiscal 2013.

Our cash and cash equivalents consist of bank balances and investments in money market funds. These investments have staggered maturity dates, none of which exceed three months. They have a high degree of liquidity since the securities are traded in public markets. During fiscal 2012, significant uses of cash are summarized in the following table:

	Fiscal Year Ended
	August 31, 2012
	(in millions)
Significant uses of cash
Investing activities:
Additions to refinery turnaround costs	$	(3.7	)
Proceeds from asset disposition		2.6
Property, plant and equipment
Other general capital items (tank repairs, refinery piping, etc)		(6.9	)
Retail petroleum upgrade		(3.3	)
DHT 2 second reactor		(3.1	)
Retail maintenance (blacktop, roof, HVAC, rehab)		(3.0	)
Non refinery capital equipment		(1.8	)
Environmental		(1.4	)
State and federal mandates:
Renewable fuels		(.4	)
Total property, plant and equipment		(19.9	)
Net cash (used in) investing activities		(21.0	)
Financing activities:
Dividends to stockholder		(64.9	)
Net (payments) borrowings on revolving credit facility		(24.0	)
Principal reductions of long-term debt		(1.2	)
Net cash (used in) financing activities		(90.1	)
Working capital items:
Accounts payable decrease		(37.7	)
Accounts receivable increase		(9.2	)
Derivative liability decrease		(2.8	)
Income taxes payable increase		26.3
Prepaid expense decrease		20.6
Decrease in inventory		15.7
Sales use and fuel taxes payable increase		5.2
Amounts due to affiliated companies, net decrease		3.0
Accrued liabilities increase		1.6
Cash provided by working capital items	$	22.7

We require a substantial investment in working capital which is susceptible to large variations during the year resulting from purchases of inventory and seasonal demands. Inventory purchasing activity is a function of sales activity and turnaround cycles for the different refinery units.

Future liquidity, both short and long-term, will continue to be primarily dependent on realizing a refinery margin sufficient to cover fixed and variable expenses, including planned capital expenditures. We expect to be able

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to meet our working capital, capital expenditure, contractual obligations, letter of credit and debt service requirements out of cash flow from operations, cash on hand and available borrowings under our Amended and Restated Revolving Credit Facility of $175,000,000. This provides the Company with flexibility relative to its cash flow requirements in light of market fluctuations, particularly involving crude oil prices and seasonal business cycles and will assist the Company in meeting its working capital, ongoing capital expenditure needs and for general corporate purposes. The agreement expires on May 18, 2016. Under the Amended and Restated Revolving Credit Facility, the applicable margin is calculated on the average unused availability as follows: (a) for base rate borrowing, at the greater of the Agent Bank’s prime rate the Federal Funds Open Rate plus 1.5%; or the Daily LIBOR rate plus 3%; plus an applicable margin of 0% to .5%; (b) for euro-rate based borrowings, at the LIBOR Rate plus an applicable margin of 2.75% to 3.25%. The Agent Bank’s prime rate at August 31, 2012 was 3.25%.

The Revolving Credit Facility is secured primarily by certain cash accounts, accounts receivable and inventory. Until maturity, we may borrow on a borrowing base formula as set forth in the facility.

We had outstanding letters of credit of $6,533,000 as of August 31, 2012. As of August 31, 2012, we had no outstanding borrowings under the Revolving Credit Facility resulting in net availability of $168,467,000.

The Company’s 10.5% First Senior Secured Notes mature in 2018, at which time the Company will either have to pay the principal amount in full or refinance the Notes.

The following is a summary of our significant contractual cash obligations for the periods indicated that existed as of August 31, 2012 and is based on information appearing in the Notes to the Consolidated Financial Statements in Item 8:

	Payments due by period
Contractual Obligations	Total		Less Than 1 Year		1 – 3 Years		3 – 5 Years		More than 5 Years
	(in thousands)
Long-term debt	$	370,194	$	1,318	$	1,971	$	1,377	$	365,528
Operating leases		75,525		12,644		21,521		16,546		24,814
Interest on 10.5% Senior Notes due 8/15/2018 (a) (b)		210,788		19,163		76,650		76,650		38,325
Total contractual cash obligations (c)	$	656,507	$	33,125	$	100,142	$	94,573	$	428,667

(a) On March 8, 2011, the Company sold $365,000,000 of the Senior Secured Notes due 2018 for $352,020,600, resulting in original issue discount of $12,979,400, which will be amortized over the life of the Senior Secured Notes due 2018 using the interest method and is not reflected in this table. The net proceeds of the offering of $344,249,000 were used to fund the tender offer for all of its outstanding Senior Notes due 2012, pay accrued interest of $3,400,000 there on and a redemption premium related thereto. See Note 9 to “Consolidated Financial Statements, Item 8”.

(b) The above does not reflect our long term Amended and Restated Revolving Credit Facility, which had a balance of $0 as of August 31, 2012. The facility’s balance remains $0 during the first quarter of the 2013 fiscal year. Also does not include interest on the Revolving Credit Facility. The applicable margin varies with our facility leverage ratio calculation. Under the amended and restated Revolving Credit Facility, for base rate borrowings, interest is calculated at the greater of the Agent’s prime rate, federal funds open rate plus 0.5% or the daily LIBOR rate plus 1.0% plus the applicable margin of 1.25% to 1.75%. For Euro-Rate borrowings, interest is calculated at the LIBOR rate plus an applicable margin of 2.75% to 3.25%. The applicable margin varies with our facility’s average unused availability calculation See Notes 8 and 9 to “Consolidated Financial Statements, Item 8”.

(c) Pension obligations are not included since payments are not known.

32

Although we are not aware of any pending circumstances which would change our expectations, changes in the tax laws, the imposition of and changes in federal and state clean air and clean fuel requirements and other changes in environmental laws and regulations may also increase future capital expenditure levels. Future capital expenditures are also subject to business conditions affecting the industry. We continue to investigate strategic acquisitions and capital improvements to our existing facilities.

Federal, state and local laws and regulations relating to the environment affect nearly all of our operations. As is the case with all the companies engaged in similar industries, we face significant exposure from actual or potential claims and lawsuits involving environmental matters. Future expenditures related to environmental matters cannot be reasonably quantified in many circumstances due to the uncertainties as to required remediation methods and related clean-up cost estimates. We cannot predict what additional environmental legislation or regulations will be enacted or become effective in the future or how existing or future laws or regulations will be administered or interpreted with respect to products or activities to which they have not been previously applied.

Related Party Transactions

See Item 13, Certain Relationships and Related Transactions.

Seasonal Factors

Seasonal factors affecting the Company’s business may cause variation in the prices and margins of some of the Company’s products. For example, demand for gasoline tends to be highest in spring and summer months, while demand for home heating oil and kerosene tends to be highest in winter months.

As a result, the margin on gasoline prices versus crude oil costs generally tends to increase in the spring and summer, while margins on home heating oil and kerosene tend to increase in winter.

Inflation

The effect of inflation on the Company has not been significant during the last five fiscal years.

Recent Accounting Pronouncements

In May 2011, the FASB issued amended guidance on fair value measurement and related disclosures. The new guidance clarified the concepts applicable for fair value measurement of non-financial assets and requires the disclosure of quantitative information about the unobservable inputs used in a fair value measurement. This guidance will be effective for reporting periods beginning after December 15, 2011, and will be applied prospectively. We do not anticipate that the adoption of this amended guidance will have a material impact on our consolidated financial statements.

In June 2011, the FASB issued amended guidance on the presentation of comprehensive income. The amended guidance eliminates one of the presentation options provided by current U.S. GAAP that is to present the components of other comprehensive income as part of the statement of changes in stockholders’ equity. In addition, it gives an entity the option to present the total of comprehensive income, the components of net income, and the components of other comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements. This guidance will be effective for reporting periods beginning after December 15, 2011 and will be applied retrospectively. We adopted this statement and reflect comprehensive income in a separate statement.

In September 2011, the FASB issued an accounting standard update that amends the accounting guidance on goodwill impairment testing. The amendments are intended to reduce complexity and costs by allowing an entity the option to make a qualitative evaluation about the likelihood of goodwill impairment to determine whether it should calculate the fair value of a reporting unit. The amendments also improve previous guidance by expanding upon the examples of events and circumstances that an entity should consider between annual impairment tests in

33

determining whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. The amendments in this accounting standard update are effective for interim and annual goodwill impairment tests performed for fiscal years beginning after December 15, 2011. We do not anticipate that the adoption of this accounting standard update will have a material impact on our consolidated financial statements.

In July 2012, the FASB issued an accounting standard that gives companies testing indefinite-lived intangible assets for impairment the option of performing a qualitative assessment before calculating the fair value of the indefinite-lived intangible asset in a quantitative impairment test. If companies determine, based on qualitative factors, that the fair value of the intangible asset is more likely than not less than the carrying amount, the quantitative impairment test would be required. Otherwise, further testing would not be needed. The standard is effective for annual and interim impairment tests performed for fiscal years beginning after September 15, 2012 and early adoption is permitted. We do not anticipate that the adoption of this accounting standard will have a material impairment on our consolidated financial statements.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

We use our Amended and Restated Revolving Credit Facility to finance a portion of our operations. These on-balance sheet financial instruments, to the extent they provide for variable rates, expose us to interest rate risk resulting from changes in the PNC Prime rate, the Federal Funds rate or the LIBOR rate.

We have exposure to price fluctuations of crude oil and refined products. We do not manage the price risk related to all of our inventories of crude oil and refined products with a permanent formal hedging program, but we do manage our risk exposure by managing inventory levels and by selectively applying hedging activities. At August 31, 2012, the Company had no future positions hedging crude or product inventories.

From time to time the Company uses derivatives to reduce its exposure to fluctuations in crude oil purchase costs and refining margins. Derivative products, historically crude oil option contracts (puts) and crackspread option contracts have been used to hedge the volatility of these items. The Company does not enter such contracts for speculative purposes. The Company accounts for changes in the fair value of its contracts by marking them to market and recognizing any resulting gains or losses in its statement of operations. The Company includes the carrying amounts of the contracts in prepaid expenses and other assets or accounts payable in its Consolidated Balance Sheet.

At August 31, 2012, the Company had 780,000 barrels of heating oil and gasoline crackspread swaps outstanding as part of its risk management strategy. This represents approximately 43.0% of scheduled distillate production through December 2012. The remainder of the crackspread swap contracts expire sequentially beginning September 2012 through December 2012. These derivative instruments are being used by the Company to lock in margins on future sales by the Company of heating oil.

During the year ended August 31, 2012, the Company recognized $28,848,000 of gains in its Consolidated Statement of Operations. Of this amount $14,978,000 was realized losses (cash losses) for contracts which expired for the period ending August 31, 2012 and $43,826,000 was unrealized gains (non-cash gains) over the remaining term of the contracts as of August 31, 2012.

As of November 12, 2012, the mark to market valuation over the remaining term of the crackspread swap contracts changed $23,606,000 from an unrealized gain position of $28,848,000 as of August 31, 2012 to a realized gain position of $5,242,000. See also Note 1 to the “Company’s Consolidated Financial Statements”.

At August 31, 2012, we were exposed to the risk of market price declines with respect to a substantial portion of our crude oil and refined product inventories.

34

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

INDEX TO FINANCIAL STATEMENTS

	Page
Report of Independent Registered Public Accounting Firm		36
Consolidated Financial Statements:
Balance Sheets		37
Statements of Operations		38
Statements of Comprehensive Income (Loss)		39
Statements of Stockholder’s Equity		40
Statements of Cash Flows		41
Notes to Consolidated Financial Statements		42

35

Report of Independent Registered Public Accounting Firm

The Board of Directors and Stockholder

United Refining Company

Warren, Pennsylvania

We have audited the accompanying consolidated balance sheets of United Refining Company and subsidiaries as of August 31, 2012 and 2011, and the related consolidated statements of operations, comprehensive income (loss) , stockholder’s equity and cash flows for each of the three years in the period ended August 31, 2012. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of United Refining Company and subsidiaries as of August 31, 2012 and 2011, and the results of their operations and their cash flows for each of the three years in the period ended August 31, 2012, in conformity with accounting principles generally accepted in the United States of America.

/s/ BDO USA, LLP

New York, New York

November 19, 2012

36

UNITED REFINING COMPANY AND SUBSIDIARIES

Consolidated Balance Sheets

(in thousands, except share amounts)

	August 31,
	2012			2011
Assets
Currents:
Cash and cash equivalents	$	137,540		$	16,660
Accounts receivable, net		120,599			111,426
Inventories, net		156,220			171,880
Prepaid expenses and other assets		19,813			40,387
Deferred income taxes		1,048			14,458
Amounts due from affiliated companies, net		89			3,104
Total current assets		435,309			357,915
Property, plant and equipment, net		253,387			270,974
Deferred financing costs, net		8,471			10,148
Goodwill		1,349			1,349
Tradename		10,500			10,500
Amortizable intangible assets, net		1,164			1,270
Deferred turnaround costs and other assets, net		18,150			18,455
	$	728,330		$	670,611
Liabilities and Stockholder’s Equity
Current:
Current installments of long-term debt	$	1,318		$	978
Accounts payable		42,203			79,946
Derivative liability		9,098			55,720
Accrued liabilities		16,916			15,358
Income taxes payable		28,931			2,627
Sales, use and fuel taxes payable		21,892			16,637
Total current liabilities		120,358			171,266
Revolving credit facility		—			24,000
Long term debt: less current installments		358,678			356,109
Deferred income taxes		15,022			11,353
Deferred retirement benefits		92,996			87,130
Total liabilities		587,054			649,858
Commitments and contingencies
Stockholder’s equity:
Common stock; $.10 par value per share—shares authorized 100; issued and outstanding 100		—			—
Additional paid-in capital		24,825			24,789
Retained earnings		135,988			10,112
Accumulated other comprehensive loss		(19,537	)		(14,148	)
Total stockholder’s equity		141,276			20,753
	$	728,330		$	670,611

See accompanying notes to consolidated financial statements.

37

UNITED REFINING COMPANY AND SUBSIDIARIES

Consolidated Statements of Operations

(in thousands)

	Year Ended August 31,
	2012			2011			2010
Net sales	$	3,730,925		$	3,166,876		$	2,654,401
Costs and expenses:
Costs of goods sold (exclusive of depreciation, amortization, and (gains) losses on derivative contracts)		3,198,025			2,903,258			2,559,873
(Gains) losses on derivative contracts		(28,848	)		58,733			—
Selling, general and administrative expenses		157,581			149,456			150,825
Depreciation, amortization and asset impairments		45,817			22,097			21,794
		3,372,575			3,133,544			2,732,492
Operating income (loss)		358,350			33,332			(78,091	)
Other income (expense):
Interest expense, net		(40,869	)		(40,550	)		(35,171	)
Other, net		(4,711	)		(2,564	)		(1,518	)
Loss on early extinguishment of debt		—			(1,245	)		—
		(45,580	)		(44,359	)		(36,689	)
Income (loss) before income tax expense (benefit)		312,770			(11,027	)		(114,780	)
Income tax expense (benefit):
Current		101,130			5,131			(38,280	)
Deferred		20,824			(8,750	)		(366	)
		121,954			(3,619	)		(38,646	)
Net income (loss)		190,816			(7,408	)		(76,134	)
Less net income attributable to non-controlling interest		—			711			—
Net income (loss) attributable to United Refining Company’s Stockholder	$	190,816		$	(8,119	)	$	(76,134	)

See accompanying notes to consolidated financial statements.

38

UNITED REFINING COMPANY AND SUBSIDIARIES

Consolidated Statements of Comprehensive Income (Loss)

(in thousands)

	Year Ended August 31,
	2012			2011			2010
Net income (loss) attributable to United Refining Company’s Stockholder	$	190,816		$	(8,119	)	$	(76,134	)
Other comprehensive (loss) income, net of taxes:
Unrecognized post retirement (costs) income, net of taxes of $(3,745), $241 and $10,072 for the years ended August 31, 2012, 2011 and 2010, respectively		(5,389	)		346			31,055
Other comprehensive (loss) income		(5,389	)		346			31,055
Total comprehensive income (loss)	$	185,427		$	(7,773	)	$	(45,079	)

See accompanying notes to consolidated financial statements.

39

UNITED REFINING COMPANY AND SUBSIDIARIES

Consolidated Statements of Stockholder’s Equity

(in thousands, except share data)

	Common Stock				Additional Paid-In Capital		Retained Earnings			Accumulated Other Comprehensive (Loss) Income			Non-Controlling Interest			Total Stockholder’s Equity
	Shares		Amount
Balance at August 31, 2009		100	$	—	$	21,998	$	94,365		$	(45,549	)	$	—		$	70,814
Other comprehensive income		—		—		—		—			31,055			—			31,055
Contribution from Parent under the Tax Sharing Agreement		—		—		502		—			—			—			502
Net loss		—		—		—		(76,134	)		—			—			(76,134	)
Balance at August 31, 2010		100		—		22,500		18,231			(14,494	)		—			26,237
Other comprehensive income		—		—		—		—			346			—			346
Contribution from Parent under the Tax Sharing Agreement		—		—		2,289		—			—			—			2,289
Net loss (income)		—		—		—		(8,119	)		—			711			(7,408	)
Issuance of common stock		—		—		—		—			—			15,000			15,000
Dissolution of non-controlling interest		—		—		—		—			—			(15,711	)		(15,711	)
Balance at August 31, 2011		100		—		24,789		10,112			(14,148	)		—			20,753
Other comprehensive loss		—		—		—		—			(5,389	)		—			(5,389	)
Contribution from Parent under the Tax Sharing Agreement		—		—		36		—			—			—			36
Net income		—		—		—		190,816			—			—			190,816
Dividends		—		—		—		(64,940	)		—			—			(64,940	)
August 31, 2012		100	$	—	$	24,825	$	135,988		$	(19,537	)	$	—		$	141,276

See accompanying notes to consolidated financial statements.

40

UNITED REFINING COMPANY AND SUBSIDIARIES

Consolidated Statements of Cash Flows

(in thousands)

	Year Ended August 31,
	2012			2011			2010
Cash flows from operating activities:
Net income (loss)	$	190,816		$	(7,408	)	$	(76,134	)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation, amortization and asset impairments		49,354			23,939			22,127
Unrealized (gain) loss on derivative contracts		(43,826	)		51,414			—
Non cash portion of loss on early extinguishment of debt		—			330			—
Deferred income taxes		20,824			(8,750	)		(366	)
(Gain) loss on asset dispositions		(1,496	)		1,484			1,030
Cash provided by (used in) working capital items		22,654			30,214			(27,641	)
Net income attributable to non-controlling interest dissolved during the year		—			(711	)		—
Change in operating assets and liabilities:
Other assets, net		(3,174	)		(5	)		—
Deferred retirement benefits		(3,268	)		(3,903	)		13,196
Other noncurrent liabilities		—			—			(4	)
Total adjustments		41,068			94,012			8,342
Net cash provided by (used in) operating activities		231,884			86,604			(67,792	)
Cash flows from investing activities:
Additions to property, plant and equipment		(19,845	)		(27,874	)		(26,471	)
Additions to deferred turnaround costs		(3,725	)		(18,910	)		(1,498	)
Proceeds from asset dispositions		2,639			729			25
Net cash used in investing activities		(20,931	)		(46,055	)		(27,944	)
Cash flows from financing activities:
Distribution from Parent under the Tax Sharing Agreement		36			2,289			502
Proceeds from issuance of common stock of non-controlling interest		—			15,000			—
Dividends to stockholder		(64,940	)		—			—
Dissolution of non-controlling interest		—			(15,000	)		—
Proceeds from issuance of long-term debt		—			352,021			—
Principal reductions of long-term debt		(1,169	)		(325,076	)		(1,648	)
Net (payments) borrowings on revolving credit facility		(24,000	)		(59,000	)		83,000
Deferred financing costs		—			(11,293	)		(10	)
Net cash (used in) provided by financing activities		(90,073	)		(41,059	)		81,844
Net increase (decrease) in cash and cash equivalents		120,880			(510	)		(13,892	)
Cash and cash equivalents, beginning of year		16,660			17,170			31,062
Cash and cash equivalents, end of year	$	137,540		$	16,660		$	17,170
Cash provided by (used in) working capital items:
Accounts receivable, net	$	(9,173	)	$	(47,234	)	$	21,190
Refundable income taxes		—			36,390			(36,390	)
Inventories		15,660			34,958			30,703
Prepaid expenses and other assets		20,574			(12,446	)		(13,380	)
Amounts due from affiliated companies, net		3,015			(132	)		(2,163	)
Accounts payable		(37,743	)		14,326			(17,877	)
Derivative liability		(2,796	)		4,306			—
Accrued liabilities		1,558			(211	)		(1,448	)
Income taxes payable		26,304			2,075			(4,597	)
Sales, use and fuel taxes payable		5,255			(1,818	)		(3,679	)
Total Change	$	22,654		$	30,214		$	(27,641	)
Cash paid during the period for:
Interest	$	39,293		$	41,205		$	35,809
Income taxes	$	75,033		$	1,621		$	5,765
Non-cash investing and financing activities:
Property additions and capital leases	$	2,224		$	762		$	942

See accompanying notes to consolidated financial statements.

41

UNITED REFINING COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Description of Business and Summary of Significant Accounting Policies

Description of Business and Basis of Presentation

The consolidated financial statements include the accounts of United Refining Company and its subsidiaries, United Refining Company of Pennsylvania and its subsidiaries, Kiantone Pipeline Corporation (collectively, the “Company”) and United Refining Asphalt, Inc. (“URA”), a variable interest entity that was created in January 2011 for which the Company was the primary beneficiary. The Company ceased to be the primary beneficiary of URA as of August 31, 2011 and URA was deconsolidated as of that date and URA was dissolved. All significant intercompany balances and transactions have been eliminated in consolidation.

A variable interest entity (“VIE”) is defined as an entity that either has investor voting rights that are not proportional to their economic interests or has equity investors that do not provide sufficient financial resources for the entity to support its activities. A VIE is required to be consolidated by a company if that company is the primary beneficiary. The primary beneficiary of the VIE is the company that controls the VIE’s activities and is subject to a majority of the risk of loss from the VIE’s activities or, if no company is subject to a majority of such risk, the company that is entitled to receive a majority of the VIE’s residual returns.

The Company is a petroleum refiner and marketer in its primary market area of Western New York and Northwestern Pennsylvania. Operations are organized into two business segments: wholesale and retail.

The wholesale segment is responsible for the acquisition of crude oil, petroleum refining, supplying petroleum products to the retail segment and the marketing of petroleum products to wholesale and industrial customers. The retail segment operates a network of Company operated retail units under the Red Apple Food Mart^® and Country Fair^® brand names selling petroleum products under the Kwik Fill^®, Citgo^® and Keystone^® brand names, as well as convenience and grocery items.

The Company is a wholly-owned subsidiary of United Refining, Inc., a wholly-owned subsidiary of United Acquisition Corp., which in turn is a wholly-owned subsidiary of Red Apple Group, Inc. (the “Parent”).

Cash and Cash Equivalents

For purposes of the consolidated statements of cash flows, the Company considers all highly liquid investment securities with maturities of three months or less at date of acquisition to be cash equivalents.

Derivative Instruments

From time to time the Company uses derivatives to reduce its exposure to fluctuations in crude oil purchase costs and refining margins. Derivative products, historically crude oil option contracts (puts) and crackspread option contracts have been used to hedge the volatility of these items. The Company does not enter such contracts for speculative purposes. The Company accounts for changes in the fair value of its contracts by marking them to market and recognizing any resulting gains or losses in its statement of operations. The Company includes the carrying amounts of the contracts in prepaid expenses and other assets or derivative liability in its Consolidated Balance Sheet.

At August 31, 2012, the Company had 780,000 barrels of heating oil crackspread swaps outstanding as part of its risk management strategy. This represents approximately 43.0% of scheduled distillate production through December 2012. These crackspread swap contracts expire sequentially beginning September 2012 through December 2012. These derivative instruments are being used by the Company to lock in margins on future sales by the Company of heating oil.

42

UNITED REFINING COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The fair value and balance sheet classification of our derivative instruments as of August 31, 2012 and 2011 are as follows:

	August 31, 2012
	Notional Balance		Maturity Date	Derivative Liability
	(in thousands)
Not designated as hedges under ASC 815
Heating oil crackspread swaps		780 barrels	Monthly September 2012 through December 2012	$	9,098
Total derivative instruments		780 barrels		$	9,098
	August 31, 2011
	Notional Balance		Maturity Date	Derivative Liability
	(in thousands)
Not designated as hedges under ASC 815
Heating oil and gasoline crackspread swaps		4,575 barrels	Monthly September 2011 through December 2012	$	55,720
Total derivative instruments		4,575 barrels		$	55,720

For the fiscal years ended August 31, 2012 and 2011, the Company recognized $(28,848,000) and $58,733,000 of (gains) losses in costs and expenses in its Consolidated Statements of Operations.

Inventories and Exchanges

Inventories are stated at the lower of cost or market, with cost being determined under the Last-in, First-out (LIFO) method for crude oil and petroleum product inventories and the First-in, First-out (FIFO) method for merchandise. Supply inventories are stated at either lower of cost or market or replacement cost and include various parts for the refinery operations. If the cost of inventories exceeds their market value, provisions are made currently for the difference between the cost and the market value.

Property, Plant and Equipment

Property, plant and equipment is stated at cost and depreciated by the straight-line method over the respective estimated useful lives. Routine current maintenance, repairs and replacement costs are charged against income. Expenditures which materially increase values expand capacities or extend useful lives are capitalized. A summary of the principal useful lives used in computing depreciation expense is as follows:

	Estimated Useful Lives (Years)
Refining		20-30
Marketing		15-30
Transportation		20-30

Leases

The Company leases land, buildings, and equipment under long-term operating and capital leases and accounts for the leases in accordance with ASC 360-10-30-8. Lease expense for operating leases is recognized on

43

UNITED REFINING COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

a straight-line basis over the expected lease term. The lease term begins on the date the Company has the right to control the use of the leased property pursuant to the terms of the lease.

Deferred Maintenance Turnarounds

The cost of maintenance turnarounds, which consist of complete shutdown and inspection of significant units of the refinery at intervals of two or more years for necessary repairs and replacements, are deferred when incurred and amortized on a straight-line basis over the period of benefit, which ranges from 2 to 10 years. As of August 31, 2012 and 2011, deferred turnaround costs included in Deferred Turnaround Costs and Other Assets, amounted to $14,316,000 and $17,789,000, net of accumulated amortization of $26,695,000 and $20,642,000, respectively. Amortization expense included in costs of goods sold for the fiscal years ended August 31, 2012, 2011 and 2010 amounted to $7,198,000, $4,350,000 and $5,056,000, respectively.

Amortizable Intangible Assets

The Company amortizes identifiable intangible assets such as brand names, non-compete agreements, leasehold covenants and deed restrictions on a straight line basis over their estimated useful lives which range from 5 to 25 years.

Revenue Recognition

Revenues for products sold by the wholesale segment are recorded upon delivery of the products to our customers, at which time title to those products is transferred and when payment has either been received or collection is reasonably assured. At no point do we recognize revenue from the sale of products prior to the transfer of its title. Title to product is transferred to the customer at the shipping point, under pre-determined contracts for sale at agreed upon or posted prices to customers of which collectability is reasonably assured. Revenues for products sold by the retail segment are recognized immediately upon sale to the customer. Included in Net Sales and Costs of Goods Sold are consumer excise taxes of $225,605,000, $224,551,000 and $218,811,000 for the years ended August 31, 2012, 2011 and 2010, respectively.

Cost Classifications

Our Cost of goods sold (which excludes depreciation and amortization on property, plant and equipment and (gains) or losses on derivative contracts) includes Refining Cost of Products Sold and related Refining Operating expenses.

Refining Cost of Products Sold includes cost of crude oil, other feedstocks, blendstocks, the cost of purchased finished products, amortization of turnaround costs, transportation costs and distribution costs. Retail cost of products sold includes cost for motor fuels and for merchandise. Motor fuel cost of products sold represents net cost for purchased fuel. Merchandise cost of products sold includes merchandise purchases, net of merchandise rebates and inventory shrinkage. Wholesale cost of products sold includes the cost of fuel and lubricants, transportation and distribution costs and labor.

Income Taxes

The Company accounts for income taxes using the asset and liability method. Under the asset and liability method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective

44

UNITED REFINING COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

The Company’s results of operations are included in the consolidated Federal Income tax return of the Parent and separately in various state jurisdictions. Income taxes are calculated on a separate return basis with consideration of the Tax Sharing Agreement between the Parent and its subsidiaries. The Company is open to examination for tax years 2002 through 2011 and there is a federal tax audit in process for the tax years 2007 through 2010. There are currently no state tax audits in process and there are no unsettled income tax assessments outstanding. The Company’s policy is to recognize interest and penalties accrued on any unrecognized tax positions as a component of interest expense, net and other, net, respectively. No amounts of such expenses are currently accrued.

Post-Retirement Healthcare and Pension Benefits

The Company provides post-retirement healthcare benefits to salaried and certain hourly employees that retired prior to September 1, 2010. The benefits provided are hospitalization and medical coverage for the employee and spouse until age 65. Benefits continue until the death of the retiree, which results in the termination of benefits for all dependent coverage. If an employee leaves the Company as a terminated vested member of a pension plan prior to normal retirement age, the person is not entitled to any post-retirement healthcare benefits. Benefits payable under this program are secondary to any benefits provided by Medicare or any other governmental programs.

In June 2010, the Company announced changes to the healthcare and pension plans provided to salaried employees. Effective September 1, 2010, postretirement medical benefits for new hires and active salaried employees retiring after September 1, 2010 were eliminated. Additionally, effective January 1, 2011, deductibles and co-payments were added to the medical benefits plan for all active and retired employees. For salaried employees meeting certain age and service requirements, the Company contributes a defined dollar amount towards the cost of retiree healthcare based upon the employee’s length of service. Similarly, effective August 31, 2010, benefits under the Company’s defined benefit pension plan were frozen for all salaried employees, including the Company’s Chief Executive Officer and Chief Financial Officer. The Company will provide an enhanced contribution under its defined contribution 401(k) plan as well as a transition contribution for older employees. The changes made for the salary group described above were also incorporated into the collective bargaining agreement reached with the International Union of Operating Engineers, Local No.95 effective February 1, 2012.

The Company accrues post-retirement benefits other than pensions, during the years that the employee renders the necessary service, of the expected cost of providing those benefits to an employee and the employee’s beneficiaries and covered dependents.

Use of Estimates

The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

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UNITED REFINING COMPANY AND SUBSIDIARIES

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Allowance for Doubtful Accounts

The Company records an allowance for doubtful accounts based on specifically identified amounts that we believe to be uncollectible. The Company also recorded additional allowances based on historical collection experience and its assessment of the general financial conditions affecting the customer base. Senior management reviews accounts receivable on a weekly basis to determine if any receivables will potentially be uncollectible. After all attempts to collect a receivable have failed, the receivable is written off against the allowance.

Concentration Risks

Financial instruments which potentially subject the Company to concentrations of credit risk consist principally of temporary cash investments.

The Company places its temporary cash investments with quality financial institutions. At times, such investments were in excess of FDIC insurance limits. The Company has not experienced any losses in such accounts.

The Company purchased approximately 10% of its cost of goods sold from one vendor during the fiscal years ended August 31, 2012 and 2011, respectively. The Company is not obligated to purchase from this vendor, and, if necessary, there are other vendors from which the Company can purchase crude oil and other petroleum based products. The Company had approximately $1,004,000 and $4,507,000 in accounts payable for the years ended August 31, 2012 and 2011 to this respective vendor.

Environmental Matters

The Company expenses environmental expenditures related to existing conditions resulting from past or current operations and from which no current or future benefit is discernible. Expenditures, which extend the life of the related property or mitigate or prevent future environmental contamination are capitalized. The Company determines its liability on a site by site basis and records a liability at the time when it is probable and can be reasonably estimated. The Company’s estimated liability is reduced to reflect the anticipated participation of other potentially responsible parties in those instances where it is probable that such parties are legally responsible and financially capable of paying their respective shares of the relevant costs. The estimated liability of the Company is not reduced for possible recoveries from insurance carriers and is recorded in accrued liabilities.

Goodwill and Other Non-Amortizable Assets

In accordance with ASC 350, goodwill and intangible assets deemed to have indefinite lives are no longer amortized but are subject to annual impairment tests in accordance with ASC 350. Other definite lived intangible assets continue to be amortized over their estimated useful lives.

The Company performed separate impairment tests for its goodwill and tradename using the discounted cash flow method. The fair value of the goodwill and tradename exceeded their respective carrying values. The Company has noted no subsequent indication that would require testing its goodwill and tradename for impairment.

Long-Lived Assets

Whenever events or changes in circumstances indicate that the carrying value of any of these assets (other than goodwill and tradename) may not be recoverable, the Company will assess the recoverability of such assets

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UNITED REFINING COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

based upon estimated undiscounted cash flow forecasts. When any such impairment exists, the related assets will be written down to fair value.

Other Comprehensive (Loss) Income

The Company reports comprehensive (loss) income in accordance with ASC 220-10. ASC 220-10 establishes guidelines for the reporting and display of comprehensive (loss) income and its components in financial statements. Comprehensive (loss) income includes charges and credits to equity that is not the result of transactions with the shareholder. Included in other comprehensive loss for the Company is a charge for unrecognized post retirement costs, which is net of taxes in accordance with ASC 715. The accumulated other comprehensive loss balance is made up entirely of unrecognized post retirement costs.

Recent Accounting Pronouncements

In May 2011, the FASB issued amended guidance on fair value measurement and related disclosures. The new guidance clarifies the concepts applicable for fair value measurement of non-financial assets and requires the disclosure of quantitative information about the unobservable inputs used in a fair value measurement. This guidance was effective for interim and annual reporting periods beginning after December 15, 2011 and was applied prospectively. The adoption of this amended guidance did not have a material impact on our consolidated financial statements.

In June 2011, the FASB issued amended guidance on the presentation of comprehensive income. The amended guidance eliminates one of the presentation options provided by current U.S. GAAP, that is, to present the components of other comprehensive income as part of the statement of changes in stockholders’ equity. In addition, it gives an entity the option to present the total of comprehensive income, the components of net income and the components of other comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements. This guidance is effective for annual reporting periods and interim periods within those years, beginning after December 15, 2011 and will be applied retrospectively. We adopted this statement and reflect comprehensive income in a separate statement.

In September 2011, the FASB issued an accounting standard update that amends the accounting guidance on goodwill impairment testing. The amendments are intended to reduce complexity and costs by allowing an entity the option to make a qualitative evaluation about the likelihood of goodwill impairment to determine whether it should calculate the fair value of a reporting unit. The amendments also improve previous guidance by expanding upon the examples of events and circumstances that an entity should consider between annual impairment tests in determining whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. The amendments in this accounting standard update are effective for interim and annual goodwill impairment tests performed for fiscal years beginning after December 15, 2011. We do not anticipate that the adoption of this accounting standard update will have a material impact on our consolidated financial statements.

In July 2012, the FASB issued an accounting standard that gives companies testing indefinite-lived intangible assets for impairment the option of performing a qualitative assessment before calculating the fair value of the indefinite-lived intangible asset in a quantitative impairment test. If companies determine, based on qualitative factors, that the fair value of the intangible asset is more likely than not less than the carrying amount, the quantitative impairment test would be required. Otherwise, further testing would not be needed. The standard is effective for annual and interim impairment tests performed for fiscal years beginning after September 15, 2012 and early adoption is permitted. We do not anticipate that the adoption of this accounting standard will have a material impairment on our consolidated financial statements.

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Reclassification

Certain amounts in the prior year’s consolidated financial statements have been reclassified to conform with the presentation in the current year.

2. Accounts Receivable, Net

As of August 31, 2012 and 2011, accounts receivable were net of allowance for doubtful accounts of $1,800,000, respectively.

3. Inventories

Inventories consist of the following:

	August 31,
	2012		2011
	(in thousands)
Crude Oil	$	40,419	$	47,897
Petroleum Products		66,296		80,302
Total @ LIFO		106,715		128,199
Merchandise		23,707		21,408
Supplies		25,798		22,273
Total @ FIFO		49,505		43,681
Total Inventory	$	156,220	$	171,880

Included in petroleum product inventories are exchange balances either held for or due from other petroleum marketers. These balances are not significant.

The Company does not own sources of crude oil and depends on outside vendors for its needs.

As of August 31, 2012 and 2011, the replacement cost of LIFO inventories exceeded their LIFO carrying values by approximately $77,727,000 and $92,059,000, respectively. For the fiscal years ended August 31, 2012 and 2011, the Company recorded a charge to cost of sales from a LIFO layer liquidation of $4,325,000 and $11,467,000, respectively.

4. Property, Plant and Equipment

Property, plant and equipment is summarized as follows:

	August 31,
	2012		2011
	(in thousands)
Refinery equipment	$	316,489	$	304,259
Marketing (i.e. retail outlets)		111,914		105,753
Transportation		9,665		8,229
Construction-in-progress		15,935		36,893
		454,003		455,134
Less: Accumulated depreciation		200,616		184,160
	$	253,387	$	270,974

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UNITED REFINING COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

During the fiscal year ended August 31, 2012, the Company re-evaluated its efforts to construct a Coker Facility and determined that it was necessary to suspend the project indefinitely. As a result, it recorded a charge of $20,122,000 which is included in depreciation, amortization and asset impairments associated with the design of the facility. Management believes that the remainder of the material costs amounting to $6,964,000 will be utilized for other projects within the refinery and the Company will begin depreciating the assets over the estimated remaining life of approximately 20 years. The Company also placed into service $2,700,000 of coker related assets associated with a different project. As of August 31, 2011, construction-in-progress included approximately $29,719,000 of material and design costs associated with the construction of the Coker Facility.

5. Goodwill and Intangible Assets

As of August 31, 2012 and 2011, the Company’s intangible assets and goodwill, included in the Company’s retail segment, were as follows:

	Weighted Average Remaining Life		August 31, 2012				August 31, 2011
			Gross Carrying Amount		Accumulated Amortization		Gross Carrying Amount		Accumulated Amortization
	(in thousands)
Amortizable intangible assets:
Deed restrictions		14 yrs.	$	800	$	341	$	800	$	309
Leasehold covenants		11 yrs.		1,490		785		1,490		711
			$	2,290	$	1,126	$	2,290	$	1,020
Non-amortizable assets:
Tradename			$	10,500	$	—	$	10,500	$	—
Goodwill			$	1,349	$	—	$	1,349	$	—

Amortization expense for the fiscal years ended August 31, 2012, 2011, and 2010 amounted to $106,000, $106,000 and $107,000, respectively.

Amortization expense for intangible assets subject to amortization for each of the years in the five-year period ending August 31, 2017 is estimated to be $106,000 in each year.

6. Accrued Liabilities

Accrued liabilities include the following:

	August 31,
	2012		2011
	(in thousands)
Interest	$	114	$	349
Payrolls and benefits		15,241		13,303
Other		1,561		1,706
	$	16,916	$	15,358

7. Leases

The Company occupies premises, primarily retail gas stations and convenience stores and office facilities under long-term leases which require minimum annual rents plus, in certain instances, the payment of additional rents based upon sales. The leases generally are renewable for one to three five-year periods.

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UNITED REFINING COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

As of August 31, 2012 and 2011, capitalized lease obligations, included in long-term debt, amounted to $822,000 and $918,000, respectively, inclusive of current portion of $64,000 and $96,000, respectively. The related assets (retail gas stations and convenience stores) as of August 31, 2012 and 2011 amounted to $541,000 and $630,000, net of accumulated amortization of $538,000 and $1,190,000, respectively. Lease amortization amounting to $89,000, $139,000 and $167,000 for the years ended August 31, 2012, 2011, and 2010, respectively is included in depreciation and amortization expense.

Future minimum lease payments as of August 31, 2012 are summarized as follows:

Year ended August 31,	Capital Leases		Operating Leases
	(in thousands)
2013	$	155	$	12,644
2014		161		11,619
2015		152		9,902
2016		140		9,079
2017		140		7,467
Thereafter		539		24,814
Total minimum lease payments		1,287		75,525
Less: Minimum sublease rents		—		40
Net minimum lease payments		1,287	$	75,485
Less: Amount representing interest		465
Present value of net minimum lease payments	$	822

Net rent expense for operating leases amounted to $12,502,000, $12,137,000 and $12,107,000 for the years ended August 31, 2012, 2011 and 2010, respectively.

8. Credit Facility

On May 18, 2011, the Company, United Refining Company of Pennsylvania, Kiantone Pipeline Corporation, Country Fair, Inc. and Kwik-Fill Corporation (as Guarantor) entered into an amended and restated Revolving Credit Facility (“Amended and Restated Revolving Credit Facility”) with PNC Bank, National Association as Administrator (the “Agent”) increasing the maximum facility commitment from $130,000,000 to $175,000,000 and extending the term to May 18, 2016. Under the Amended and Restated Revolving Credit Facility, interest is calculated as follows: (a) for base rate borrowings, at the greater of the Agent’s prime rate, federal funds open rate plus 0.5% or the daily LIBOR rate plus 1.0% plus the applicable margin of 1.25% to 1.75% and (b) for euro-rate borrowings, at the LIBOR rate plus an applicable margin of 2.75% to 3.25%. The applicable margin will vary depending on a formula calculating the Company’s unused availability under the facility. The Amended and Restated Revolving Credit Facility continues to be secured primarily by certain cash accounts, accounts receivable and inventory which amounted to $393,000,000 as of August 31, 2012. Until maturity, the Company may borrow on a borrowing base formula as set forth in the facility. The participating banks in the Amended and Restated Revolving Credit Facility are PNC Bank, National Association, Bank of America, N.A., Manufacturers and Traders Trust Company, and Bank Leumi USA.

As of August 31, 2012, there were no Base-Rate borrowings nor Euro-Rate borrowings outstanding under the agreement. As of August 31, 2011, $14,000,000 of Base-Rate borrowing and $10,000,000 of Euro-Rate borrowings were outstanding under the agreement. $6,533,000 and $4,433,000 of letters of credit were

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UNITED REFINING COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

outstanding under the agreement at August 31, 2012 and 2011, respectively. The weighted average interest rate for Base-Rate borrowing for the years ended August 31, 2012 and 2011 was 4.6% and 4.0%, respectively. The weighted average interest rate for Euro-Rate borrowings for the years ended August 31, 2012 and 2011 was 3.1% and 2.6%, respectively. The Company pays a commitment fee of 3/8% per annum on the unused balance of the facility. All bank related charges are included in Other, net in the Consolidated Statements of Operations.

9. Long-Term Debt

On March 8, 2011, the Company sold $365,000,000 of 10.500% Senior Secured Notes due 2018 for $352,020,600, resulting in original issue discount of $12,979,400, which is being amortized over the life of the Senior Secured Notes due 2018 using the interest method. The net proceeds of the offering of $344,249,000 were used to retire all of its outstanding 10 ¹/₂% Senior Notes due 2012, pay accrued interest of $3,400,000 and a redemption premium related thereto. A loss of $1,245,000 on the early extinguishment of debt was recorded consisting of a redemption premium of $915,000, a write-off of unamortized net debt premium of $1,153,000 and a write-off of deferred financing costs of $1,483,000. The Senior Secured Notes are guaranteed on an unsecured basis by all of the Company’s domestic subsidiaries existing at March 8, 2011. The Senior Secured Notes are secured on a first-priority basis by the Company’s assets comprising its refinery located in Warren, Pennsylvania and the capital stock of its pipeline subsidiary, subject to permitted liens. The Senior Secured Notes will rank equally with all of the Company’s existing and future senior indebtedness that is not subordinate in right of payment to the Senior Secured Notes.

On February 22, 2011 the Company announced the launch of a cash tender offer (the “Tender Offer”) for any and all of its outstanding 10 ¹/₂% Senior Notes due 2012 issued under an indenture dated as of August 6, 2004 (the “2012 Indenture”) and consent solicitation (the “Solicitation”) for certain proposed amendments to the 2012 Indenture (the “Proposed Amendments”). Each holder who validly tendered its Senior Notes due 2012 and delivered consents to the Proposed Amendments prior to 5:00 pm, New York City time, on March 7, 2011, (the “Consent Date”), received the total consideration of $1,005, which included $975 as the tender offer consideration and $30 as a consent payment. In addition, accrued but unpaid interest up to, but not including, the applicable payment date of the Senior Notes due 2012 was paid in cash on all validly tendered and accepted the Senior Notes due 2012. The Company paid a total of $188,607,726 on March 8, 2011 for $181,764,375 principal amount of the Senior Notes due 2012, $5,592,750 for consent payment (which is included in interest expense, net and financing costs), and $1,250,601 for accrued interest on those Senior Notes due 2012 tendered.

The Tender Offer expired at 12:00 midnight, New York City time, on March 21, 2011. Holders who validly tendered their Senior Notes due 2012 after the Consent Date received only the tender offer consideration and were not entitled to receive a consent payment pursuant to the Tender Offer. The Company paid the total consideration or tender offer consideration, as the case may be, plus accrued but unpaid interest, for the Senior Notes due 2012 accepted for purchase promptly following the date of such acceptance (such date, the “Final Payment Date”). On March 22, 2011, the Company paid a total of $678,225 for $670,800 principal amount of the Senior Notes due 2012 and $7,425 for accrued interest on those Senior Notes due 2012 tendered between the Consent Date (March 7, 2011) and the Final Payment Date (March 21, 2011).

On March 9, 2011, the Company issued a Notice of Redemption to all holders of its 10 ¹/₂ % Senior Notes due 2012 redeeming these Senior Notes due 2012 at 100% par value plus accrued but unpaid interest on the redemption date of April 8, 2011. On April 8, 2011, $138,962,427 was paid in total, of which $136,847,000 was for principal amount of Senior Notes due 2012 and $2,115,427 was for accrued interest.

Both the Indenture of the Senior Unsecured Notes and the facility (See Note 8 to “Consolidated Financial Statements”) require that the Company maintain certain financial covenants. The facility requires the Company

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

to meet certain financial covenants, as defined in the facility, a minimum Fixed Charge Coverage Ratio and a minimum Consolidated Net Worth. In addition, the facility limits the amount the Company can distribute for capital and operating leases. Both the facility and the Indenture of the Senior Unsecured Notes restrict the amount of dividends payable and the incurrence of additional Indebtedness. As of August 31, 2012 the Company is in compliance with covenants under the facility and the Indenture.

A summary of long-term debt is as follows:

	August 31,
	2012		2011
	(in thousands)
Long-term debt:
10.50% Senior Unsecured Notes due February 28, 2018, net of unamortized discount of $10,198 and $12,052, respectively	$	354,802	$	352,948
Other long-term debt		5,194		4,139
		359,996		357,087
Less: Current installments of long-term debt		1,318		978
Total long-term debt, less current installments	$	358,678	$	356,109

The principal amount of long-term debt matures as follows:

	Year ended August 31,
	(in thousands)
2013	$	1,318
2014		1,188
2015		783
2016		1,144
2017		233
Thereafter		365,528
		370,194
Unamortized discount		10,198
Total	$	359,996

The following financing costs have been deferred and are being amortized to expense over the term of the related debt:

	August 31,
	2012		2011
	(in thousands)
Beginning balance	$	10,880	$	8,441
Current year additions		—		10,880
Total financing costs		10,880		19,321
Less:
Deferred financing costs associated with debt retirement		—		8,441
Accumulated amortization		2,409		732
	$	8,471	$	10,148

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UNITED REFINING COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Amortization expense for the fiscal years ended August 31, 2012, 2011 and 2010 amounted to $1,677,000, $1,362,000 and $1,150,000, respectively.

10. Employee Benefit Plans

The Company sponsors three defined benefit plans and seven defined contribution plans covering substantially all its full time employees. The benefits under the defined benefit plans are based on each employee’s years of service and compensation. Effective February 1, 2012 benefits under the Company’s defined benefit pension plan for hourly employees were frozen. Additionally, effective August 31, 2010 benefits under the Company’s defined benefit pension plan were frozen for all salaried employees, including the Company’s Chief Executive Officer and Chief Financial Officer. The Company will provide enhanced contributions under its defined contribution 401(k) plan as well as a transition contribution for older employees. The Company’s policy is to contribute the minimum amounts required by the Employee Retirement Income Security Act of 1974 (ERISA), as amended and any additional amounts for strategic financial purposes or to meet other goals relating to plan funded status. The assets of the plans are invested in an investment trust fund and consist of interest-bearing cash, separately managed accounts and bank common/collective trust funds.

In addition to the above, the Company provides certain post-retirement healthcare benefits to salaried and certain hourly employees that retired prior to September 1, 2010. These post-retirement benefit plans are unfunded and the costs are paid by the Company from general assets.

Net periodic pension cost and post-retirement healthcare benefit cost consist of the following components for the years ended August 31, 2012, 2011, and 2010:

	Pension Benefits									Other Post-Retirement Benefits
	2012			2011			2010			2012			2011			2010
	(in thousands)
Service cost	$	993		$	1,800		$	3,563		$	1,114		$	1,507		$	3,364
Interest cost on benefit obligation		5,037			4,946			5,724			2,428			2,520			4,740
Expected return on plan assets		(4,717	)		(4,521	)		(3,924	)		—			—			—
Curtailment effect		126			—			436			—			—			—
Amortization of transition obligation		2			2			2			—			—			597
Amortization and deferrals		599			1,468			3,566			(662	)		(1,128	)		1,842
Net periodic benefit cost	$	2,040		$	3,695		$	9,367		$	2,880		$	2,899		$	10,543

The Company adopted ASC 715-30-25 effective August 31, 2007. ASC 715-30-25 requires an employer to recognize the funded status of each of its defined pension and postretirement benefit plans as a net asset or liability in its statement of financial position with an offsetting amount in accumulated other comprehensive income, and to recognize changes in that funded status in the year in which changes occur through comprehensive income.

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Other changes in plan assets and benefit obligation recognized in Other Comprehensive Income consist of the following for the fiscal years ended August 31, 2012 and 2011 (in thousands):

	Pension Benefits						Other Post-Retirement Benefits
	2012			2011			2012			2011
Curtailment	$	(4,698	)	$	—		$	—		$	—
Current year actuarial (gain) / loss		20,084			(5,412	)		7,621			5,167
Amortization of actuarial gain / (loss)		(560	)		(1,319	)		(5,748	)		(3,712	)
Current year prior service (credit) / cost		—			—			(13,934	)		—
Amortization of prior service credit / (cost)		(39	)		(149	)		6,410			4,840
Amortization of transition asset / (obligation)		(2	)		(2	)		—			—
Total recognized in other comprehensive (income) / loss	$	14,785		$	(6,882	)	$	(5,651	)	$	6,295
Total recognized in net periodic benefit cost and other comprehensive (income) / loss	$	16,825		$	(3,189	)	$	(2,769	)	$	9,194

The following table summarizes the change in benefit obligations and fair values of plan assets for the years ended August 31, 2012 and 2011:

	Pension Benefits						Other Post-Retirement Benefits
	2012			2011			2012			2011
	(in thousands)
Change in benefit obligation:
Benefit obligation @ beginning of year	$	99,040		$	97,316		$	57,145		$	51,127
Service cost		993			1,800			1,114			1,507
Interest cost		5,037			4,946			2,428			2,520
Plan amendments		—			—			(13,934	)		—
Curtailment		(4,572	)		—			—			—
Medicare act subsidy effect		—			—			51			70
Actuarial (gains) / losses		19,609			(1,538	)		7,635			5,173
Benefits paid		(3,748	)		(3,484	)		(2,313	)		(3,252	)
Benefit obligation @ end of year		116,359			99,040			52,126			57,145
Change in plan assets:
Fair values of plan assets @ beginning of year		66,166			54,503			—			—
Actual return on plan assets		4,242			8,397			—			—
Company contributions		5,748			6,750			2,262			3,182
Benefits paid		(3,748	)		(3,484	)		(2,313	)		(3,252	)
Medicare act subsidy effect		—			—			51			70
Fair values of plan assets @ end of year		72,408			66,166			—			—
Unfunded status	$	43,951		$	32,874		$	52,126		$	57,145

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

	Pension Benefits				Other Post-Retirement Benefits
	2012		2011		2012		2011
	(in thousands)
Amounts recognized in the balance sheet consist of:
Current liability	$	—	$	—	$	3,398	$	3,198
Noncurrent liability		43,951		32,874		48,728		53,947
Net amount recognized	$	43,951	$	32,874	$	52,126	$	57,145
Note: For plans with assets less than the accumulated benefit obligation (ABO), the aggregate ABO is $116,308,000 and $94,859,000, while the aggregate asset value is $72,408,000 and $66,166,000 for the years ended August 31, 2012 and 2011, respectively.

Amounts recognized in Accumulated Other Comprehensive Income:

	Pension Benefits						Other Post-Retirement Benefits
	2012			2011			2012			2011
	(in thousands)
Accumulated net actuarial losss	$	(38,411	)	$	(23,459	)	$	(48,752	)	$	(46,879	)
Accumulated prior service cost		(1	)		(166	)		54,050			46,526
Accumulated transition obligation		—			(2	)		—			—
Net amount recognized, before tax effect	$	(38,412	)	$	(23,627	)	$	5,298		$	(353	)

The preceding table presents two measures of benefit obligations for the pension plans. Accumulated benefit obligation (ABO) generally measures the value of benefits earned to date. Projected benefit obligation (PBO) also includes the effect of assumed future compensation increases for plans in which benefits for prior service are affected by compensation changes. Each of the three pension plans, whose information is aggregated above, have asset values less than these measures. Plan funding amounts are calculated pursuant to ERISA and Internal Revenue Code rules. The postretirement benefits are not funded.

Weighted average assumptions used to determine year end benefit obligations:

	Pension Benefits				Other Post-Retirement Benefits
	2012		2011		2012		2011
Discount rate		3.75% - 4.00%		5.00% - 5.45%		3.65%		5.20%
Rate of compensation increase		3.00%		3.00%
Health care cost trend
Initial trend		N/A		N/A		7.25%		7.50%
Ultimate trend		N/A		N/A		5.00%		5.00%
Year ultimate reached		N/A		N/A		2022		2017

The fiscal year ended August 31, 2012 benefit costs for the hourly pension plan and the post-retirement benefit plan were re-measured at November 30, 2011. The discount rates used for the re-measurement were 5.40% and 5.05% for the pension plan and post retirement benefit plan, respectively.

55

UNITED REFINING COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The discount rate assumptions at August 31, 2012 and 2011 were determined independently for each plan. A yield curve was produced for a universe containing the majority of U.S.-issued Aa-graded corporate bonds, all of which were non-callable (or callable with make-whole provisions). For each plan, the discount rate was developed as the level equivalent rate that would produce the same present value as that using spot rates aligned with the projected benefit payments.

Weighted average assumptions used to determine net periodic costs:

	Pension Benefits				Other Post-Retirement Benefits
	2012		2011		2012		2011
Discount rate		5.00% - 5.45%		4.75% - 5.15%		5.20%		4.90%
Expected return on plan assets		7.00%		8.00%		N/A		N/A
Rate of compensation increase		3.00%		4.00%		N/A		N/A
Health care cost trend rate
—Initial trend		N/A		N/A		7.50%		8.00%
—Ultimate trend		N/A		N/A		5.00%		5.00%
—Year ultimate reached		N/A		N/A		2017		2017

For measurement purposes, the assumed annual rate of increase in the per capita cost of covered medical and dental benefits was 7.25% and 7.50% for 2012 and 2011, respectively. The rates were assumed to decrease gradually to 5% for medical benefits until 2022 and remain at that level thereafter. The healthcare cost trend rate assumption has a significant effect on the amounts reported. To illustrate, a 1 percentage point change in the assumed healthcare cost trend rate would have the following effects:

	1% Point Increase		1% Point Decrease
	(in thousands)
Effect on total of service and interest cost components	$	251	$	(209	)
Effect on post-retirement benefit obligation		2,798		(2,459	)

The expected return on plan assets is a long-term assumption established by considering historical and anticipated returns of the asset classes invested in by the pension plans and the allocation strategy currently in place among those classes.

A reconciliation of the above accrued benefit costs to the consolidated amounts reported on the Company’s balance sheets follows:

	August 31,
	2012			2011
	(in thousands)
Accrued pension benefits	$	43,951		$	32,874
Accrued other post-retirement benefits		52,126			57,145
		96,077			90,019
Current portion of above benefits, included in payrolls and benefits in accrued liabilities		(3,398	)		(3,198	)
Supplemental pension and other deferred compensation benefits		317			309
Deferred retirement benefits	$	92,996		$	87,130

56

UNITED REFINING COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Fair Value of Plan Assets

Our Defined Benefit plans’ assets fall into any of three fair value classifications as defined in ASC 820-10. Level 1 assets are valued based on observable prices for identical assets in active markets such as national security exchanges. Level 2 assets are valued based on a) quoted prices of similar assets in active markets, b) quoted prices for similar assets in inactive markets, c) other than quoted prices that are observable for the asset, or d) values that are derived principally from or corroborated by observable market data by correlation or other means. There are no Level 3 assets held by the plans as defined by ASC 820-10. The fair value of our plan assets as of August 31, 2012 and 2011 is as follows:

Asset Category	August 31, 2012		Level 1		Level 2		Level 3
Cash Equivalents	$	3,777,000	$	3,777,000	$	—	$	—
Mutual Funds		16,454,000		16,454,000		—		—
Equities		37,755,000		37,712,000		43,000		—
Fixed Income		14,422,000		9,326,000		5,096,000		—
Total	$	72,408,000	$	67,269,000	$	5,139,000	$	—

Asset Category	August 31, 2011		Level 1		Level 2		Level 3
Cash Equivalents	$	3,099,425	$	—	$	3,099,425	$	—
Mutual Funds		14,382,429		14,382,429		—		—
Equities		35,492,553		35,285,580		206,973		—
Fixed Income		13,191,325		8,359,611		4,831,714		—
Total	$	66,165,732	$	58,027,620	$	8,138,112	$	—

The pension plans weighted-average target allocation for the year ended August 31, 2012 and strategic asset allocation matrix as of August 31, 2012 and 2011 are as follows:

	Target Allocation			Plan Assets @ 8/31
Asset Category	2012			2012			2011
Equity Securities		55 - 75	%		63	%		64	%
Debt Securities		20 - 30	%		30	%		28	%
Alternative Investments		0 - 10	%		2	%		4	%
Cash/Cash Equivalents		0 - 12	%		5	%		4	%
					100	%		100	%

The investment policy for the plans is formulated by the Company’s Pension Plan Committee (the “Committee”). The Committee is responsible for adopting and maintaining the investment policy, managing the investment of plan assets and ensuring that the plans’ investment program is in compliance with all provisions of ERISA, as well as the appointment of any investment manager who is responsible for implementing the plans’ investment process.

In drafting a strategic asset allocation policy, the primary objective is to invest assets in a prudent manner to meet the obligations of the plans to the Company’s employees, their spouses and other beneficiaries, when the obligations come due. The stability and improvement of the plans’ funded status is based on the various reasons for which money is funded. Other factors that are considered include the characteristics of the plans’ liabilities and risk-taking preferences.

57

UNITED REFINING COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The asset classes used by the plan are the United States equity market, the international equity market, the United States fixed income or bond market and cash or cash equivalents. Plan assets are diversified to minimize the risk of large losses. Cash flow requirements are coordinated with the custodian trustees and the investment manager to minimize market timing effects. The asset allocation guidelines call for a maximum and minimum range for each broad asset class as noted above.

The target strategic asset allocation and ranges established under the asset allocation represents a long-term perspective. The Committee will rebalance assets to ensure that divergences outside of the permissible allocation ranges are minimal and brief as possible.

The net of investment manager fee asset return objective is to achieve a return earned by passively managed market index funds, weighted in the proportions identified in the strategic asset allocation matrix. Each investment manager is expected to perform in the top one-third of funds having similar objectives over a full market cycle.

The investment policy is reviewed by the Committee at least annually and confirmed or amended as needed.

Under ASC 715-30-25, the transition obligation, prior service costs, and actuarial (gains)/losses are recognized in Accumulated Other Comprehensive Income each August 31 or any interim measurement date, while amortization of these amounts through net periodic benefit cost will occur in accordance with ASC 715-30 and ASC 715-60. The estimated amounts that will be amortized in 2013 are as follow:

Estimated 2013 Amortization	Pension Benefits		Other Post-Retirement Benefits
	(in thousands)
Prior service cost (credit) amortization	$	1	$	(6,933	)
Net loss amortization		1,209		7,056
Total	$	1,210	$	123

The following contributions and benefit payments, which reflect expected future service, as appropriate, are expected to be paid:

	Pension Benefits		Other Post-Retirement Benefits
Employer Contributions			Gross		(Subsidy receipts)
	(in thousands)
FYE 8/31/2013 (expected)	$	5,241	$	3,408	$	(278	)
Expected Benefit Payments for FYE 8/31
2013	$	4,897	$	3,677	$	(278	)
2014		5,143		4,191		(319	)
2015		5,192		4,650		(357	)
2016		5,417		5,021		(400	)
2017		5,732		5,336		(447	)
2018 - 2022		33,220		32,756		(3,075	)

The pension plan contributions are deposited into a trust, and the pension plan benefit payments are made from trust assets. For the postretirement benefit plan, the contributions and the benefit payments are the same and represent expected benefit amounts, which are paid from general assets.

58

UNITED REFINING COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The Company’s postretirement benefit plan is affected by The Medicare Prescription Drug, Improvement and Modernization Act of 2003 (the “Act”). Beginning in 2006, the Act provides a Federal subsidy payment to companies providing benefit plans that meet certain criteria regarding their generosity. The Company expects to receive those subsidy payments. The Company has accounted for the Act in accordance with ASC 715-60-05-8, which requires, in the Company’s case, recognition on August 31, 2004. The benefit obligation as of that date reflects the effect of the federal subsidy, and this amount is identified in the table reconciling the change in benefit obligation above. The estimated effect of the subsidy on cash flow is shown in the accompanying table of expected benefit payments above. The expected subsidy reduced net periodic postretirement benefit cost by $3,075,000, as compared with the amount calculated without considering the effects of the subsidy.

The Company also contributes to voluntary employee savings plans through regular monthly contributions equal to various percentages of the amounts invested by the participants. The Company’s contributions to these plans amounted to $1,839,000, $1,565,000 and $932,000 for the years ended August 31, 2012, 2011 and 2010, respectively.

11. Income Taxes

Income tax expense (benefit) consists of:

	Year Ended August 31,
	2012		2011			2010
	(in thousands)
Federal:
Current	$	83,571	$	2,568		$	(38,570	)
Deferred		13,806		(5,475	)		(3,184	)
		97,377		(2,907	)		(41,754	)
State:
Current		17,559		2,563			290
Deferred		7,018		(3,275	)		2,818
		24,577		(712	)		3,108
	$	121,954	$	(3,619	)	$	(38,646	)

Reconciliation of the differences between income taxes computed at the Federal statutory rate and the provision for income taxes attributable to income before income tax expense (benefit) is as follows:

	Year Ended August 31,
	2012			2011			2010
	(in thousands)
U. S. federal income taxes (benefits) at the statutory rate	$	109,486		$	(3,871	)	$	(40,171	)
State income taxes (benefits), net of Federal benefit		16,012			(460	)		2,002
Domestic production activity deduction		(3,500	)		(105	)		(52	)
Permanent items		458			405			(214	)
Employment credits		(616	)		(714	)		—
Other		114			(61	)		(211	)
Disallowance of prior period domestic production activity deduction		—			1,187			—
Income tax expense (benefit)	$	121,954		$	(3,619	)	$	(38,646	)

59

UNITED REFINING COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Deferred income tax liabilities (assets) are comprised of the following:

	August 31,
	2012			2011
	(in thousands)
Current deferred income tax liabilities (assets):
Inventory valuation	$	5,668		$	9,441
Accounts receivable allowance		(713	)		(734	)
Accrued liabilities		(3,191	)		(2,232	)
Unrealized loss on derivative instruments		(2,891	)		(20,835	)
Other		79			(98	)
		(1,048	)		(14,458	)
Deferred income tax liabilities (assets):
Property, plant and equipment		53,148			49,657
Accrued liabilities		(37,420	)		(35,940	)
Federal carryforwards		—			(49	)
State net operating loss carryforwards		(11,118	)		(15,011	)
Valuation allowance		7,548			9,224
Other		2,864			3,472
		15,022			11,353
Net deferred income tax liability (asset)	$	13,974		$	(3,105	)

The Company’s results of operations are included in the consolidated Federal tax return of the Parent, See Note 13 to “Consolidated Financial Statements”. The Company has no Federal net operating loss carryforwards for regular tax purposes. For state purposes, two entities have Pennsylvania net operating loss carry forwards of $121,000,000 and $49,000,000, respectively, which will expire between fiscal year 2019 and 2031. Pennsylvania limits the amount of net operating loss carry forwards which can be used to offset Pennsylvania taxable income to the greater of $3,000,000 or 20% of Pennsylvania taxable income prior to the net operating loss deduction. Due to these limitations, the Company has recognized valuation allowances, net of a federal benefit, of $7,548,000 and $9,224,000 at August 31, 2012 and 2011, respectively, for Pennsylvania net operating loss carry forwards not anticipated to be realized before expiration.

12. Disclosures About Fair Value of Financial Instruments

The following methods and assumptions were used to estimate the fair value of each class of financial instrument for which it is practicable to estimate that value.

The carrying amount of cash and cash equivalents, trade accounts receivable, the revolving credit facility and current liabilities approximate fair value because of the short maturity of these instruments. Derivative financial instruments are recorded at fair value using significant other observable inputs (Level 2).

The fair value of long-term debt (See Note 9 to “Consolidated Financial Statements”) was determined using the fair market value of the individual debt instruments. As of August 31, 2012, the carrying amount and estimated fair value of these debt instruments approximated $359,996,000 and $380,800,000, respectively.

60

UNITED REFINING COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The following tables list the assets or liabilities measured and recorded at fair value within the fair value hierarchy as of August 31, 2012 and 2011.

	August 31, 2012		Level 1		Level 2		Level 3
	(in thousands)
Liabilities
Commodity OTC Sweep Contracts	$	9,098	$	—	$	9,098	$	—
Liabilities
Commodity OTC Sweep Contracts	$	55,720	$	—	$	55,720	$	—

13. Transactions with Affiliated Companies

On December 21, 2001, the Company acquired the operations and working capital assets of Country Fair. The fixed assets of Country Fair were acquired by related entities controlled by John A. Catsimatidis, the indirect sole shareholder of the Company. These assets are being leased to the Company at an annual aggregate rental fee which management, based on an independent third party valuation believes is fair, over a period ranging from 10 to 20 years. During the fiscal years ended August 31, 2012, 2011 and 2010, $5,049,000, $5,102,000, and $5,102,000 of rent payments were made to these related entities. The Company is not a guarantor on the underlying mortgages on the properties.

Concurrent with the above acquisition of Country Fair, the Company entered into a management agreement with a non-subsidiary affiliate to operate and manage 10 of the retail units owned by the non-subsidiary affiliate on a turn-key basis. For the years ended August 31, 2012, 2011 and 2010, the Company billed the affiliate $1,289,000, $1,266,000 and $1,243,000 for management fees and overhead expenses incurred in the management and operation of the retail units which amount was deducted from expenses. As of August 31, 2012 and 2011, the Company had a (payable) receivable to the affiliate of $(15,000) and $175,000, respectively, under the terms of the agreement, which is included in Amounts Due from Affiliated Companies, Net.

On September 29, 2000, the Company sold 42 retail units to an affiliate for $23,870,000. Concurrent with this asset sale, the Company terminated the leases on 8 additional retail locations which it had previously leased from a non-subsidiary affiliate. The Company has entered into a management agreement with the non-subsidiary affiliate to operate and manage the retail units owned by the non-subsidiary affiliate on a turnkey basis. For the years ended August 31, 2012, 2011 and 2010, the Company billed the affiliate $2,250,000, $2,032,000 and $2,099,000, respectively, for management fees and overhead expenses incurred in the management and operation of the 51 retail units, which amount was deducted from expenses. For the fiscal years ended August 31, 2012, 2011 and 2010, net sales to the affiliate amounted to $198,785,000, $184,749,000 and $140,277,000, respectively. As of August 31, 2012 and 2011, the Company had a (payable) receivable to the affiliate of $(241,000) and $342,000, respectively, under the terms of the agreement, which is included in Amounts Due From Affiliated Companies, net.

The Company paid a service fee relating to certain costs incurred by its Parent for the Company’s New York office. During the years ended August 31, 2012, 2011 and 2010, such fees amounted to approximately $2,000,000, $2,000,000, and $2,000,000, respectively, which is included in Selling, General and Administrative Expenses.

The Company joins with the Parent and the Parent’s other subsidiaries in filing a Federal income tax return on a consolidated basis. Income taxes are calculated on a separate return basis with consideration of the Tax

61

UNITED REFINING COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Sharing Agreement between the Parent and its subsidiaries. Amounts related to the Tax Sharing Agreement for the utilization by the Company of certain tax attributes of the Parent and other subsidiaries related to the tax years ended August 31, 2012, 2011 and 2010 amounted to $36,000, $2,289,000 and $1,502,000, respectively and have been recorded as a capital contribution. As of August 31, 2012 and 2011, the Company had a receivable from the Parent of $344,000 and $2,586,000, respectively, under the terms of the Tax Sharing Agreement.

During the years ended August��31, 2012, 2011 and 2010, the Company incurred $357,000, $372,000 and $372,000, respectively, as its share of occupancy expenses for its offices in New York that it shares with affiliates of the Company. Such offices are located in a building owned by John Catsimatidis.

14. Environmental Matters and Other Contingencies

The Company is subject to federal, state and local laws and regulations relating to pollution and protection of the environment such as those governing releases of certain materials into the environment and the storage, treatment, transportation, disposal and clean-up of wastes, including, but not limited to, the Federal Clean Water Act, as amended, the Clean Air Act, as amended, the Resource Conservation and Recovery Act of 1976, as amended, the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended, and analogous state and local laws and regulations.

Due to the nature of the Company’s business, the Company is and will continue to be subject to various environmental claims, legal actions and actions by regulatory authorities. In the opinion of management, all current matters are without merit or are of such kind or involve such amounts that an unfavorable disposition would not have a material adverse effect on the consolidated financial condition or operations of the Company.

The management of the Company believes that remediation and related environmental response costs incurred during the normal course of business, including contractual obligations as well as activities required under applicable law and regulation, will not have a material adverse effect on its consolidated financial condition or operations.

In addition to the foregoing proceedings, the Company and its subsidiaries are parties to various legal proceedings that arise in the ordinary course of their respective business operations. In the opinion of management, all such matters are adequately covered by insurance, or if not so covered, are without merit or are of such kind, or involve such amounts that unfavorable dispositions would not have a material adverse effect on the consolidated financial position or results of operations of the Company.

We are also monitoring closely all climate change and Greenhouse Gas (“GHG”) legislation, better known as Cap and Trade as well as fuels mandates requiring the increased use of renewable resources in motor fuel. We believe, however, that implementation of reasonable, incremental changes over time will not have a material adverse effect on the Company’s consolidated financial position or operations. The ultimate cost of GHG reduction mandates and their effect on our business are, however, unknown until implementing regulations are available. Similarly, the costs of compliance with renewable fuels mandates in the future remains unknown until a final regulatory structure has been adopted.

15. Segments of Business

The Company is a petroleum refiner and marketer in its primary market area of Western New York and Northwestern Pennsylvania. Operations are organized into two business segments: wholesale and retail.

62

UNITED REFINING COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The wholesale segment is responsible for the acquisition of crude oil, petroleum refining, supplying petroleum products to the retail segment and the marketing of petroleum products to wholesale and industrial customers. The retail segment operates a network of Company operated retail units under the Red Apple Food Mart^® and Country Fair^® brand names selling petroleum products under the Kwik Fill^®, Citgo^® and Keystone^® brand names, as well as convenience and grocery items.

The accounting policies of the reportable segments are the same as those described in Footnote 1 to Consolidated Financial Statements. Intersegment revenues are calculated using market prices and are eliminated upon consolidation. Summarized financial information regarding the Company’s reportable segments is presented in the following table.

	Year Ended August 31,
	2012		2011		2010
	(in thousands)
Net Sales
Retail	$	1,726,047	$	1,623,768	$	1,359,046
Wholesale		2,004,878		1,543,108		1,295,355
	$	3,730,925	$	3,166,876	$	2,654,401
Intersegment Sales
Wholesale	$	901,472	$	848,262	$	639,397
Operating Income (Loss)
Retail	$	13,474	$	689	$	4,470
Wholesale		344,876		32,643		(82,561	)
	$	358,350	$	33,332	$	(78,091	)
Depreciation, Amortization and Asset Impairments
Retail	$	5,691	$	5,340	$	5,480
Wholesale		40,126		16,757		16,314
	$	45,817	$	22,097	$	21,794
Capital Expenditures (including non-cash portion)
Retail	$	8,433	$	4,172	$	5,180
Wholesale		13,636		24,464		22,233
	$	22,069	$	28,636	$	27,413
Total Assets
Retail	$	169,935	$	167,359	$	146,932
Wholesale		558,395		503,252		490,171
	$	728,330	$	670,611	$	637,103

16. Subsidiary Guarantors

All the Company’s wholly-owned subsidiaries fully and unconditionally guarantee on an unsecured basis, on a joint and several basis, the Company’s Senior Secured Notes due 2018. There are no restrictions within the consolidated group on the ability of the Company or any of its subsidiaries to obtain loans from or pay dividends

63

UNITED REFINING COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

CONDENSED CONSOLIDATING BALANCE SHEETS

(in thousands)

to other members of the consolidated group. Financial information of the Company’s wholly-owned subsidiary guarantors is as follows:

	August 31, 2012
	United Refining Company			Guarantors			Eliminations			United Refining Company & Subsidiaries
Assets
Current:
Cash and cash equivalents	$	122,219		$	15,321		$	—		$	137,540
Accounts receivable, net		79,870			40,729			—			120,599
Inventories, net		127,469			28,751			—			156,220
Prepaid expenses and other assets		16,311			3,502			—			19,813
Deferred income taxes		(114	)		1,162			—			1,048
Amounts due from affiliated companies		344			(255	)		—			89
Intercompany		117,992			16,703			(134,695	)		—
Total current assets		464,091			105,913			(134,695	)		435,309
Property, plant and equipment, net		176,282			77,105			—			253,387
Deferred financing costs, net		8,471			—			—			8,471
Goodwill and other non-amortizable assets		—			11,849			—			11,849
Amortizable intangible assets, net		—			1,164			—			1,164
Deferred turnaround costs & other assets		15,173			2,977			—			18,150
Investment in subsidiaries		17,018			—			(17,018	)		—
	$	681,035		$	199,008		$	(151,713	)	$	728,330
Liabilities and Stockholder’s Equity
Current:
Current installments of long-term debt	$	939		$	379		$	—		$	1,318
Accounts payable		22,528			19,675			—			42,203
Derivative liability		9,098			—			—			9,098
Accrued liabilities		11,147			5,769			—			16,916
Income taxes payable		25,866			3,065			—			28,931
Sales, use and fuel taxes payable		17,622			4,270			—			21,892
Intercompany		—			134,695			(134,695	)		—
Total current liabilities		87,200			167,853			(134,695	)		120,358
Long term debt: less current installments		356,448			2,230			—			358,678
Deferred income taxes		5,753			9,269			—			15,022
Deferred retirement benefits		90,358			2,638			—			92,996
Total liabilities		539,759			181,990			(134,695	)		587,054
Commitment and contingencies
Stockholder’s equity
Common stock, $.10 par value per share- shares authorized 100; issued and outstanding 100		—			18			(18	)		—
Additional paid-in capital		24,825			10,651			(10,651	)		24,825
Retained earnings		135,988			8,123			(8,123	)		135,988
Accumulated other comprehensive loss		(19,537	)		(1,774	)		1,774			(19,537	)
Total stockholder’s equity		141,276			17,018			(17,018	)		141,276
	$	681,035		$	199,008		$	(151,713	)	$	728,330

64

UNITED REFINING COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

CONDENSED CONSOLIDATING BALANCE SHEETS

(in thousands)

	August 31, 2011
	United Refining Company			Guarantors			Eliminations			United Refining Company & Subsidiaries
Assets
Current:
Cash and cash equivalents	$	5,927		$	10,733		$	—		$	16,660
Accounts receivable, net		66,758			44,668			—			111,426
Inventories, net		145,713			26,167			—			171,880
Prepaid expenses and other assets		36,731			3,656			—			40,387
Deferred income taxes		13,120			1,338			—			14,458
Amounts due from affiliated companies		2,586			518			—			3,104
Intercompany		121,933			20,882			(142,815	)		—
Total current assets		392,768			107,962			(142,815	)		357,915
Property, plant and equipment, net		196,521			74,453			—			270,974
Deferred financing costs, net		10,148			—			—			10,148
Goodwill and other non-amortizable assets		—			11,849			—			11,849
Amortizable intangible assets, net		—			1,270			—			1,270
Deferred turnaround costs & other assets		17,803			652			—			18,455
Investment in subsidiaries		9,267			—			(9,267	)		—
	$	626,507		$	196,186		$	(152,082	)	$	670,611
Liabilities and Stockholder’s Equity
Current:
Current installments of long-term debt	$	654		$	324		$	—		$	978
Accounts payable		58,246			21,700			—			79,946
Derivative liability		55,720			—			—			55,720
Accrued liabilities		8,726			6,632			—			15,358
Income taxes payable		3,181			(554	)		—			2,627
Sales, use and fuel taxes payable		12,322			4,315			—			16,637
Intercompany		—			142,815			(142,815	)		—
Total current liabilities		138,849			175,232			(142,815	)		171,266
Revolving credit facility		24,000			—			—			24,000
Long term debt: less current installments		354,264			1,845			—			356,109
Deferred income taxes		3,245			8,108			—			11,353
Deferred retirement benefits		85,396			1,734			—			87,130
Total liabilities		605,754			186,919			(142,815	)		649,858
Commitment and contingencies
Stockholder’s equity
Common stock, $.10 par value per share-shares authorized 100; issued and outstanding 100		—			18			(18	)		—
Additional paid-in capital		24,789			10,651			(10,651	)		24,789
Retained earnings		10,112			(354	)		354			10,112
Accumulated other comprehensive loss		(14,148	)		(1,048	)		1,048			(14,148	)
Total stockholder’s equity		20,753			9,267			(9,267	)		20,753
	$	626,507		$	196,186		$	(152,082	)	$	670,611

65

UNITED REFINING COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS

(in thousands)

	Year Ended August 31, 2012
	United Refining Company			Guarantors			Eliminations			United Refining Company & Subsidiaries
Net sales	$	2,906,350		$	1,730,984		$	(906,409	)	$	3,730,925
Costs and expenses:
Costs of goods sold (exclusive of depreciation, amortization, and gains on derivative contracts)		2,526,351			1,578,083			(906,409	)		3,198,025
Gains on derivative contracts		(28,848	)		—			—			(28,848	)
Selling, general and administrative expenses		24,723			132,858			—			157,581
Depreciation, amortization and asset impairments		39,422			6,395			—			45,817
		2,561,648			1,717,336			(906,409	)		3,372,575
Operating income		344,702			13,648			—			358,350
Other income (expense):
Interest expense, net		(40,384	)		(485	)		—			(40,869	)
Other, net		(5,643	)		932			—			(4,711	)
Equity in net income of subsidiaries		8,477			—			(8,477	)		—
		(37,550	)		447			(8,477	)		(45,580	)
Income before income tax expense benefit		307,152			14,095			(8,477	)		312,770
Income tax expense
Current		97,355			3,775			—			101,130
Deferred		18,981			1,843			—			20,824
		116,336			5,618			—			121,954
Net income	$	190,816		$	8,477		$	(8,477	)	$	190,816

66

UNITED REFINING COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS

(in thousands)

	Year Ended August 31, 2011
	United Refining Company			Guarantors			Eliminations			United Refining Company & Subsidiaries			United Refining Asphalt, Inc			Eliminations			United Refining Company Consolidated
Net sales	$	2,407,819		$	1,627,733		$	(852,227	)	$	3,183,325		$	45,034		$	(61,483	)	$	3,166,876
Costs and expenses:
Costs of goods sold (exclusive of depreciation, amortization and losses on derivative contracts)		2,285,146			1,488,595			(852,227	)		2,921,514			43,227			(61,483	)		2,903,258
Losses on derivative contracts		58,733			—			—			58,733			—			—			58,733
Selling, general and administrative expenses		16,555			132,895			—			149,450			6			—			149,456
Depreciation and amortization expenses		15,663			6,019			—			21,682			415			—			22,097
		2,376,097			1,627,509			(852,227	)		3,151,379			43,648			(61,483	)		3,133,544
Operating income		31,722			224			—			31,946			1,386			—			33,332
Other income (expense):
Interest expense, net		(39,467	)		(889	)		—			(40,356	)		(194	)		—			(40,550	)
Other, net		(3,514	)		950			—			(2,564	)		—			—			(2,564	)
Loss on early extinguishment of debt		(1,245	)		—			—			(1,245	)		—			—			(1,245	)
Equity in net loss of subsidiaries		(214	)		���			214			—			—			—			—
		(44,440	)		61			214			(44,165	)		(194	)		—			(44,359	)
(Loss) income before income tax (benefit) expense		(12,718	)		285			214			(12,219	)		1,192			—			(11,027	)
Income tax (benefit) expense
Current		4,504			146			—			4,650			481			—			5,131
Deferred		(9,103	)		353			—			(8,750	)		—			—			(8,750	)
		(4,599	)		499			—			(4,100	)		481			—			(3,619	)
Net (loss) income		(8,119	)		(214	)		214			(8,119	)		711			—			(7,408	)
Less net income attributable to non-controlling interest		—			—			—			—			—			711			711
Net (loss) income attributable to United Refining Company’s Stockholder	$	(8,119	)	$	(214	)	$	214		$	(8,119	)	$	711		$	(711	)	$	(8,119	)

67

UNITED REFINING COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS

(in thousands)

	Year Ended August 31, 2010
	United Refining Company			Guarantors			Eliminations			United Refining Company & Subsidiaries
Net sales	$	1,934,752		$	1,363,456		$	(643,807	)	$	2,654,401
Costs and expenses:
Costs of goods sold (exclusive of depreciation and amortization)		1,979,311			1,224,369			(643,807	)		2,559,873
Selling, general and administrative expenses		22,097			128,728			—			150,825
Depreciation and amortization expenses		15,595			6,199			—			21,794
		2,017,003			1,359,296			(643,807	)		2,732,492
Operating (loss) income		(82,251	)		4,160			—			(78,091	)
Other income (expense):
Interest expense, net		(33,910	)		(1,261	)		—			(35,171	)
Other, net		(2,692	)		1,174			—			(1,518	)
Equity in net loss of subsidiaries		(350	)		—			350			—
		(36,952	)		(87	)		350			(36,689	)
(Loss) income before income tax (benefit) expense		(119,203	)		4,073			350			(114,780	)
Income tax (benefit) expense
Current		(40,569	)		2,289			—			(38,280	)
Deferred		(2,500	)		2,134			—			(366	)
		(43,069	)		4,423			—			(38,646	)
Net loss	$	(76,134	)	$	(350	)	$	350		$	(76,134	)

68

UNITED REFINING COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS

(in thousands)

	Year Ended August 31, 2012
	United Refining Company			Guarantors			Eliminations		United Refining Company & Subsidiaries
Net cash provided by operating activities	$	218,688		$	13,156		$	—	$	231,844
Cash flows from investing activities:
Additions to property, plant and equipment		(11,324	)		(8,521	)		—		(19,845	)
Additions to deferred turnaround costs and other assets		(1,385	)		(2,340	)		—		(3,725	)
Proceeds from asset dispositions		40			2,599			—		2,639
Net cash used in investing activities		(12,669	)		(8,262	)		—		(20,931	)
Cash flows from financing activities:
Distribution from Parent under the Tax Sharing Agreement		36			—			—		36
Dividends to stockholder		(64,940	)		—			—		(64,940	)
Principal reductions of long-term debt		(823	)		(346	)		—		(1,169	)
Net reductions on revolving credit facility		(24,000	)		—			—		(24,000	)
Net cash used in financing activities		(89,727	)		(346	)		—		(90,073	)
Net increase in cash and cash equivalents		116,292			4,588			—		120,880
Cash and cash equivalents, beginning of year		5,927			10,733			—		16,660
Cash and cash equivalents, end of period	$	122,219		$	15,321		$	—	$	137,540

69

UNITED REFINING COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS

(in thousands)

	Year Ended August 31, 2011
	United Refining Company			Guarantors			Eliminations		United Refining Company & Subsidiaries			United Refining Asphalt, Inc			Eliminations		United Refining Company Consolidated
Net cash provided by operating activities	$	80,165		$	6,024		$	—	$	86,189		$	415		$	—	$	86,604
Cash flows from investing activities:
Additions to property, plant and equipment		(23,245	)		(4,629	)		—		(27,874	)		—			—		(27,874	)
Additions to deferred turnaround costs and other assets		(18,673	)		(237	)		—		(18,910	)		—			—		(18,910	)
Proceeds from asset dispositions		57			672			—		729			—			—		729
Net cash used in investing activities		(41,861	)		(4,194	)		—		(46,055	)		—			—		(46,055	)
Cash flows from financing activities:
Distribution from Parent under the Tax Sharing Agreement		2,289			—			—		2,289			—			—		2,289
Net reductions on revolving credit facilities		(59,000	)		—			—		(59,000	)		—			—		(59,000	)
Proceeds from issuance of common stock of non-controlling interest		—			—			—		—			15,000			—		15,000
Dissolution of non-controlling interest		—			—			—		—			(15,000	)		—		(15,000	)
Proceeds from issuance of long term debt		352,021			—			—		352,021			—			—		352,021
Principal reductions of long-term debt		(324,574	)		(502	)		—		(325,076	)		—			—		(325,076	)
Deferred financing costs		(10,878	)		—			—		(10,878	)		(415	)		—		(11,293	)
Net cash used in financing activities		(40,142	)		(502	)		—		(40,644	)		(415	)		—		(41,059	)
Net (decrease) increase in cash and cash equivalents		(1,838	)		1,328			—		(510	)		—			—		(510	)
Cash and cash equivalents, beginning of year		7,765			9,405			—		17,170			—			—		17,170
Cash and cash equivalents, end of period	$	5,927		$	10,733		$	—	$	16,660		$	—		$	—	$	16,660

70

UNITED REFINING COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS

(in thousands)

	Year Ended August 31, 2010
	United								United Refining
	Refining								Company &
	Company			Guarantors			Eliminations		Subsidiaries
Net cash (used in) provided by operating activities	$	(73,837	)	$	6,045		$	—	$	(67,792	)
Cash flows from investing activities:
Additions to property, plant and equipment		(21,080	)		(5,391	)		—		(26,471	)
Additions to deferred turnaround costs		(1,433	)		(65	)		—		(1,498	)
Proceeds from asset dispositions		25			—			—		25
Net cash used in investing activities		(22,488	)		(5,456	)		—		(27,944	)
Cash flows from financing activities:
Distribution from Parent under the Tax Sharing Agreement		502			—			—		502
Principal reductions of long-term debt		(668	)		(980	)		—		(1,648	)
Net borrowings on revolving credit facility		83,000			—			—		83,000
Deferred financing costs		(10	)		—			—		(10	)
Net cash provided by (used in) financing activities		82,824			(980	)		—		81,844
Net decrease in cash and cash equivalents		(13,501	)		(391	)		—		(13,892	)
Cash and cash equivalents, beginning of year		21,265			9,797			—		31,062
Cash and cash equivalents, end of period	$	7,764		$	9,406		$	—	$	17,170

71

UNITED REFINING COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

17. Quarterly Financial Data (unaudited)

	Net Sales		Operating Profit (Loss)			Net Income (Loss)
	(in thousands)
2012
First Quarter	$	944,031	$	115,950		$	62,046
Second Quarter		848,844		10,561			(237	)
Third Quarter		935,798		126,913			68,101
Fourth Quarter		1,002,252		104,926			60,906
2011
First Quarter	$	619,147	$	(3,112	)	$	(8,089	)
Second Quarter		692,279		10,268			261
Third Quarter		808,115		28,379			9,091
Fourth Quarter		1,047,335		(2,203	)		(9,382	)

Operating profit (loss) for the fourth quarter of 2012 is net of a $20,221,000 charge resulting from the write-off of certain design costs associated with the Company’s Coker Facility. See Note 4.

18. Legal Proceedings.

The Company and its subsidiaries are from time to time parties to various legal proceedings that arise in the ordinary course of their respective business operations. These proceedings include various administrative actions relating to federal, state and local environmental laws and regulations as well as civil matters before various courts seeking money damages. The Company believes that if the legal proceedings in which it is currently involved were determined against the Company, there would be no material adverse effect on the Company’s operations or its consolidated financial condition. In the opinion of management, all such matters are adequately covered by insurance, or if not so covered, are without merit or are of such kind, or involve such amounts that an unfavorable disposition would not have a material adverse effect on the consolidated operations or financial position of the Company.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.

None.

ITEM 9A. CONTROLS AND PROCEDURES.

Evaluation of Disclosure Controls and Procedures

Based on an evaluation of the Company’s disclosure controls and procedures (as defined in Rules 13a –15(e) and 15d – 15(e) of the Securities Exchange Act of 1934, as amended), as of August 31, 2012, the Company’s Chief Executive Officer and Chief Financial Officer (its principal executive officer and principal financial and accounting officer, respectively) have concluded that the Company’s disclosure controls and procedures were effective at a reasonable assurance level.

72

Limitations on the Effectiveness of Controls

A control system, no matter how well conceived an operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Because of the inherent limitations in all controls systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected. Our disclosure controls and procedures are designed to provide reasonable assurance of achieving its objectives. Our Chief Executive Officer and our Chief Financial Officer concluded that our disclosure controls and procedures are effective at that reasonable assurance level.

Management’s Report on Internal Control over Financial Reporting

The Company’s management is responsible for establishing and maintaining adequate internal control over financial reporting as such term is defined in Exchange Act Rule 13a-15(f). Internal control over financial reporting is a process used to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the Company’s financial statements for external reporting in accordance with generally accepted accounting principles in the United States of America (“GAAP”). Internal control over financial reporting includes policies and procedure that pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of our assets; provide reasonable assurance that transactions are recorded as necessary to permit preparation of our financial statements in accordance with GAAP; that our receipts and expenditures are being made only in accordance with the authorization of the Company’s board of directors; and provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the Company’s financial statements.

Management evaluates the effectiveness of the Company’s internal control over financial reporting using the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control Integrated Framework. Management, under the supervision and with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, assessed the effectiveness of the Company’s internal control over financial reporting as of August 31, 2012 and concluded that it is effective.

An internal control system over financial reporting has inherent limitations and may not prevent or detect misstatements. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. However, these inherent limitations are known features of the financial reporting process. Therefore, it is possible to design into the process safeguards to reduce, though not eliminate, the risk.

Changes in Internal Control over Financial Reporting

There have not been any changes in the Company’s internal controls over financial reporting that occurred during the Company’s fiscal quarter ended August 31, 2012 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

ITEM 9B. OTHER INFORMATION.

None.

73

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.

Set forth below is certain information as of November 19, 2012 with respect to all directors and executive officers of the Company.

Name	Age		Position
John A. Catsimatidis		64	Chairman of the Board, Chief Executive Officer, Director
Myron L. Turfitt		60	President, Chief Operating Officer, Director
Ashton L. Ditka		71	Senior Vice President—Marketing
Thomas E. Skarada		69	Vice President—Refining
Frederick J. Martin, Jr.		58	Vice President—Supply and Transportation
James E. Murphy		67	Vice President, Chief Financial Officer and Treasurer
John R. Wagner		53	Vice President, General Counsel and Secretary
Martin R. Bring		69	Director
Jacob Feinstein		69	Director
Kishore Lall		63	Director
Douglas Lemmonds		63	Director
Andrew Maloney		81	Director
Dennis Mehiel		70	Director

John A. Catsimatidis has been Chairman of the Board and Chief Executive Officer since February 1986, when his wholly-owned company, United Acquisition Corp., purchased our parent. He also served as President from February 1986 until September 1996. He also is Chairman of the Board, Chief Executive Officer, President, and the founder of Red Apple Group, Inc. (a holding company for certain businesses, including the Company and corporations which operate supermarkets in New York). Mr. Catsimatidis’s broad experience as a senior executive and owner of other operating businesses, his experience as a successful investor in real estate, and his twenty five year tenure as Chief Executive Officer of the Company lead us to conclude that he will make significant contributions as a director.

Myron L. Turfitt has been President and Chief Operating Officer since September 1996. From June 1987 to September 1996 he was Chief Financial Officer and Executive Vice President. From August 1983 until June 1987 he was Senior Vice President-Finance and from July 1981 to August 1983, Mr. Turfitt held the position of Vice President, Accounting and Administration. Mr. Turfitt is a CPA with over 30 years of financial and operations experience in all phases of the petroleum business including exploration and production, refining and retail marketing. His experience covers both fully-integrated major oil companies and large independents. Mr. Turfitt’s experience and training as a certified public accountant, his prior experience in other aspects of the petroleum business and his over thirty years of financial and operational experience with the Company lead us to conclude that he will make significant contributions as a director.

Ashton L. Ditka has been Senior Vice President-Marketing since July 1990. From December 1989 to July 1990 he was Vice President-Wholesale & Retail Marketing and from August 1976 until December 1989 he was Vice President-Wholesale Marketing. Mr. Ditka has over 40 years of experience in the petroleum industry, including 11 years in retail marketing with Atlantic Richfield Company.

Thomas E. Skaradahas been Vice President-Refining since February 1996. From September 1994 to February 1996 he was Assistant Vice President-Refining and from March 1993, when he joined us, to September 1994 he was Director of Regulatory Compliance. Over his 40 year refining and marketing career, Mr. Skarada has worked in virtually every segment of the downstream business including supply, distribution, refinery operations, economics, planning, research and development. He has 18 years of managerial experience with Sun Refining and Marketing Co. and one year consulting with Muse Stancil and Co. in Dallas, Texas.

74

Frederick J. Martin, Jr. has been Vice President-Supply and Transportation since February 1993. From 1980 to January 1993 he held other positions with us involving transportation, product supply, crude supply and pipeline and terminal administration.

James E. Murphyhas been Chief Financial Officer since January 1997 and in January 2009 also became Treasurer. He was Vice President-Finance from April 1995 to December 1996 and since May 1982 has held other accounting and internal auditing positions with us, including Director of Internal Auditing since April 1986. Mr. Murphy is a CPA and prior to joining us he had over 15 years experience in accounting and auditing with banking, public accounting and manufacturing companies.

John R. Wagnerhas been Vice President, General Counsel and Secretary since August 1997. Prior to joining us, Mr. Wagner served as Counsel to Dollar Bank, F.S.B. from 1988 to August 1997.

Martin R. Bringhas served as a Director since 1988. Since November 2004, he has been a partner at the law firm of Ellenoff, Grossman & Schole LLP. Previously he was a stockholder in Anderson, Kill & Olick, P.C., a New York law firm, from February 2002 to November 2004. Prior thereto Mr. Bring was a partner in the law firm of Wolf, Block, Schorr and Solis-Cohen LLP, a Philadelphia, Pennsylvania law firm and its predecessor law firm for more than 5 years. Mr. Bring’s 45 years of experience as a corporate attorney and 26 years of involvement as a legal advisor to the Company lead us to conclude that he will make significant contributions as a director.

Jacob Feinsteinhas served as a Director since 2006. Since 1999, he has been employed as a Consultant to the electric power industry in disciplines such as management, transmission, generation interconnection and power system operation and control. From 1998 to 1999, he was employed by Cogen Technologies, Inc. as a Vice President. From 1991 to 1998, he was employed by Consolidated Edison Company of New York, Inc. as a Vice President. Mr. Feinsten’s management expertise and long involvement in the energy industry lead us to conclude that he will make significant contributions as a director.

Kishore Lall has served as a Director since 1997. He is currently Managing Director & Global Head/ Diamonds & Jewelry with Standard Chartered Bank, London. He was Global Head, Business Development, International Diamond and Jewelry Group of ABN AMRO Bank in New York from September 2005 to September 2008. He served as Chief Financial Officer of Gristede’s Foods, Inc. an affiliate of the Company from August 2003 to August 2005 and Executive Vice President-Finance and Administration and Secretary of Gristede’s Foods, Inc. from May 2002 to August 2005. From January 1997 to October 1997 he served as a consultant to Red Apple Group, Inc. From June 1994 to December 1996 was a private investor. From January 1991 to May 1994 he was Senior Vice President and Head of Commercial Banking of ABN AMRO Bank (New York branch). Mr. Lall’s experience in commercial and investment banking lead us to conclude that he will make significant contributions as a director.

Douglas Lemmondshas served as a Director since 1997. He is currently the owner of TMI Executive Services Mid-Atlantic LLC. Previously he served as Vice President and International Business Manager of Mercuri Urval, a Swedish based global management consultancy and as Executive Vice President at SunTrust Bank. From May 1996 to 2002 he served as Managing Director and Chief Operating Officer, Private Banking-Americas of the Deutsche Bank Group and President of Deutsche Bank Trust Company. Private Banking-Americas operated across four separate legal entities, including a registered investment advisor, a broker-dealer, a trust company and a commercial bank. From June 1991 to May 1996 Mr. Lemmonds was the Regional Director of Private Banking of the Northeast Regional Office of the Bank of America and from August 1973 to June 1991 he held various other positions with Bank of America. Mr. Lemmond’s experience in senior management positions with various banking institutions as well as his consulting experience lead us to conclude that he will continue to make significant contributions as a director.

Andrew Maloneyhas served as a Director since 1997. He has also been counsel to De Feis O’Connell & Rose, a New York law firm since January 2003. From April 1998 to December 2002, Mr. Maloney was counsel

75

to Kramer Levin Naftalis & Frankel LLP, a New York law firm. From December 1992 to April 1998 was a partner at Brown & Wood LLP, a New York law firm. From June 1986 to December 1992 he was the United States Attorney for the Eastern District of New York. Mr. Maloney’s training and experience as an attorney in private practice and his experience with both government and law enforcement as a United States Attorney lead us to conclude that he will make significant contributions as a director.

Dennis Mehielhas served as a Director since July 2012. Mr. Mehiel previously served as a director from 2004 to 2011 and from 1997 to 2002. He has been the Chairman and Chief Executive Officer of U.S. Corrugated, Inc since 2006. Mr. Mehiel is the former Chairman and Chief Executive Officer of Sweetheart Cup Company, the nation’s largest manufacturer of institutional food service disposables, until it merged with its competitor Solo Cup Company in 2004.

Board Independence

Although the Company’s securities are not listed on any national securities exchange and we are therefore not required to have a majority of independent directors, we apply the NYSE MKT standard for independent directors to determine which, if any, of our directors are independent pursuant to such definition. The NYSE MKT defines an independent director generally as a person other than an officer or employee of the company or its subsidiaries or any other individual having a relationship, which, in the opinion of the company’s board of directors would interfere with the director’s exercise of independent judgment in carrying out the responsibilities of a director.

The Company has determined that Messrs. Feinstein, Lall, Lemmonds, Maloney and Mehiel are independent directors as defined under the NYSE MKT Rule 803.

Audit Committee

The Company does not have a class of securities listed on a national securities exchange or national securities association subject to the requirements of Rule 10A-3 of the Securities Exchange Act of 1934, as amended. Consequently, the Company does not have an audit committee at this time, and has not designated an audit committee financial expert. However, the Company is reviewing whether it would be appropriate to appoint an audit committee consisting of independent members of its board of directors.

Nominating Committee

The Company does not have a nominating committee at this time and believe this is appropriate for our Company as we have one indirect stockholder, our Chairman and Chief Executive Officer, John A. Catsimatidis. The Board of Directors, as a whole, participates in the consideration of director nominees. The Board of Directors does not have a policy with regard to the consideration of any director candidates recommended by security holders and the Board believes this is appropriate as the Company has one indirect stockholder. There are no specific minimum qualifications that the Board believes must be met by a board nominee.

Code Of Ethics

The Company has adopted a Code of Ethics pursuant to Section 406 of the Sarbanes-Oxley Act of 2002 which is filed as Exhibit 14.1 in the Company’s Annual Report on Form 10-K for the fiscal year ended August 31, 2003. A copy of the Code of Ethics is available for review on the Company’s website at www.urc.com. In the event we determine to amend or waive certain provisions of this code of ethics, we will disclose such amendments or waivers on our website athttp://www.urc.comunder the heading “Code of Ethics”. Any person may request, and the Company will provide without charge, a copy of such code of ethics by writing to John R. Wagner, General Counsel, 15 Bradley Street, Warren, Pennsylvania 16365.

Section 16(a) Beneficial Ownership Reporting Compliance

Not Applicable.

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ITEM 11. EXECUTIVE COMPENSATION.

COMPENSATION DISCUSSION AND ANALYSIS

The Summary Compensation Table and supplementary tables that follow describe the compensation paid to our Chairman of the Board and Chief Executive Officer (“CEO”), Vice President and Chief Financial Officer (“CFO”), President and Chief Operating Officer (“COO”), Senior Vice President Marketing and Vice President Refining for 2012.

Compensation Objectives and Components

The objective of the Company’s compensation program is to motivate, retain and attract management, linking incentives to financial and personal performance and enhanced shareholder value. The compensation program for the named executive officers consists of the following components:

• Salary;

• Annual performance-based cash awards; and

• Other fringe benefits and perquisites.

There is no Compensation Committee of the Board of Directors; however, the CEO and COO review and approve any proposed changes in salary, as well as discretionary bonuses for the other named executive officers.

Salary

Salaries for the named executive officers have been established by the CEO and COO. There is no policy to provide any scheduled increase to these individuals and increases may be awarded at the discretion of the CEO. There is no deferred compensation program for the named individuals or any other executives of the Company. The salaries of the CEO and COO are set by the CEO after reviewing comparable salaries for similar positions within the industry.

Annual Cash Bonus Awards

While there is no formal bonus program for the named executives, bonuses have been paid to them on an annual basis. The amount of the bonus is determined by the CEO and may vary based on the performance of the Company.

Other Fringe Benefits and Perquisites

The Company provides several fringe benefit plans including the United Refining Company Pension Plan for Salaried Employees (the “Pension Plan”) and the United Refining Company Employees’ 401(k) Plan (the “401(k) Plan”) to its named executive officers. Additionally, the Company provides other benefits, including medical and dental plans, life and accidental death insurance, short-term and long-term disability insurance, paid sick leave and vacation and paid holidays.

Potential Payments upon Termination or Change in Control

The Company does not have any change in control agreements with any of the named executive officers.

Estimated Benefits upon Termination Related to Other Than a Change in Control

The Company does not have a severance policy for benefits paid upon termination of employment.

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Indemnification of Directors and Officers

The Company’s By-laws provide an open-ended indemnity of all officers and directors to the fullest extent permitted by law.

The following table sets forth the compensation paid by the Company to its principal executive officer and principal financial officer and each of the three other most highly compensated executive officers of the Company whose salary and bonus exceeded $100,000 for the fiscal year ended August 31, 2012.

SUMMARY COMPENSATION TABLE

Name & Principal Position	Year		Annual Compensation				Change in Pension Value ($)			Other Compensation ($) (1)		Total ($)
			Salary ($)		Bonus ($)
John A. Catsimatidis		2012	$	650,000	$	1,100,000	$	—		$	11,064	$	1,761,064
Chairman of the Board &		2011		650,000		—		(40,420	)		17,414		626,994
Chief Executive Officer		2010		650,000		1,100,000		78,965			3,564		1,832,529
James E. Murphy		2012	$	151,313	$	50,000	$	—		$	18,415	$	219,728
Vice President &		2011		125,500		6,275		(34,395	)		15,291		112,671
Chief Financial Officer		2010		125,500		75,000		110,721			11,222		322,443
Myron L. Turfitt		2012	$	420,000	$	700,000	$	—		$	26,524	$	1,146,524
President &		2011		420,000		—		20,782			31,022		471,804
Chief Operating Officer		2010		420,000		700,000		180,728			8,258		1,308,986
Ashton L. Ditka		2012	$	225,479	$	40,000	$	—		$	26,573	$	292,052
Senior Vice President		2011		193,833		9,692		(48,797	)		20,261		174,989
Marketing		2010		193,833		80,000		66,945			8,250		349,028
Thomas E. Skarada		2012	$	171,643	$	60,000	$	—		$	19,507	$	251,150
Vice President		2011		148,140		7,407		(46,401	)		18,169		127,315
Refining		2010		148,140		80,000		52,600			15,290		296,030

(1) Amounts in this column represent the total of all perquisites (non-cash benefits and perquisites such as the use of employer-owned automobiles, membership dues and other personal benefits), employee benefits (employer cost of life insurance), and employer contributions to defined contribution plans (the 401(K) Plan). Amounts are reported separately under the “All Other Compensations” table below.

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2012 ALL OTHER COMPENSATION

Name	Automobile Usage		Company Contribution To 401(k) Plan		Life  Insurance Premium		Total All Other
John A. Catsimatidis	$	—	$	7,500	$	3,564	$	11,064
James E. Murphy	$	5,471	$	9,078	$	3,866	$	18,415
Myron L. Turfitt	$	4,652	$	19,550	$	2,322	$	26,524
Ashton L. Ditka	$	4,388	$	13,529	$	8,656	$	26,573
Thomas E. Skarada	$	5,307	$	10,299	$	3,901	$	19,507

PENSION BENEFITS

Name	Plan Name	Number of Years of Credited Service		Present Value of Accumulated Benefits		Payments During Last Fiscal Year
John A. Catsimatidis	United Refining Company Pension Plan for Salaried Employees		24.53	$	827,658	$	—
James E. Murphy	United Refining Company Pension Plan for Salaried Employees		28.29	$	600,091	$	—
Myron L. Turfitt	United Refining Company Pension Plan for Salaried Employees		32.17	$	1,172,915	$	—
Ashton L. Ditka	United Refining Company Pension Plan for Salaried Employees		34.08	$	908,748	$	—
Thomas E. Skarada	United Refining Company Pension Plan for Salaried Employees		17.42	$	472,668	$	—

The Pension Plan is a tax-qualified, non-contributory defined benefit plan established to provide pension benefits to employees of the Company, including the named executive officers, meeting Pension Plan eligibility criteria. The criteria states that employees are eligible to participate in, and will be enrolled in, the Pension Plan on the first day of the month coincident with or next following the later of the completion of one Year of Service and attainment of age twenty-one years. Years of service for benefits purposes are measured based on the number of years in which at least 1,000 hours are worked.

A participant’s normal retirement date is the first of the month coinciding with or following the attainment of age 65. Participants who are actively employed may also elect an unreduced option at age 59 ¹/₂. In addition to a single life annuity, benefits can be paid as other actuarially equivalent annuities.

The United Refining Company’s Pension Plan for Salaried Employees was frozen effective August 31, 2010 and participants will no longer accrue a benefit under the Plan. The Plan has been replaced by a new 3% 401(k) contribution.

The benefit formula is based on the average earnings of the participant for the three years in which such participant’s earnings were the highest. Earnings include salary and bonus up to a maximum of the IRC 401(a)(17) limit, which in the year benefits were frozen was $245,000. Benefits are calculated by multiplying the sum of (a) 1.1% of average earnings up to the Social Security compensation base, plus (b) 1.25% of average earnings in excess of the Social Security compensation base, by (c) the number of years of service. Payments of retirement benefits are not reduced by any Social Security benefits received by the participant. Effective

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May 2001, for purposes of calculating retirement benefits, the Company has fixed the earnings subject to tax under the Federal Insurance Contribution Act at $76,200.00 for years after 2001 for purposes of calculating Social Security compensation base.

In connection with a transaction in 1984, a portion of the benefits from the plan are provided through an annuity contract with an insurance company. The benefits shown in the table are gross amounts before offsetting the insured benefit and thereby represent the total benefit earned with the Company.

Vested benefits are those amounts to which participants are entitled regardless of future services to the Company. A participant is credited with a year of service for vesting purposes for each Pension Plan year during which at least 1,000 hours of service are completed, commencing with year of hire. Each executive is currently vested in his accumulated benefit.

In addition to vested benefits, the Pension Plan provides certain death benefits. Upon death of a participant, the beneficiary is entitled to receive a portion of the vested interest of the participant’s accrued benefit in the form of a monthly annuity amount, subject to eligibility requirements stipulated in the Pension Plan.

The present value of accumulated benefits in the table above has been determined by an independent actuary. These assumptions for August 31, 2012 include a 3.90% discount rate and the RP 2000 mortality table projected to 2015 with a 15-year phase-in and no collar adjustment, each of which is consistent with the assumptions used for FYE 2011 financial reporting. Further, it was assumed that benefits will commence at the earliest age in which an unreduced benefit is available (age 59.5 or current age if later) and there will be no turnover or death prior to retirement.

DIRECTOR COMPENSATION

The Company pays its non-officer Directors an annual retainer of $15,000 per year and $1,000 for meetings attended. Directors are reimbursed for reasonable travel, meals, lodging and other expenses incidental to attendance at meetings.

2012 Director Compensation

Name	Fees Earned or Paid  in Cash ($)		Option Awards ($)		Total ($)
Martin R. Bring (1)	$	—	$	—	$	—
John A. Catsimatidis (2)	$	—	$	—	$	—
Jacob Feinstein	$	—	$	—	$	—
Douglas Lemmonds	$	—	$	—	$	—
Kishore Lall	$	—	$	—	$	—
Andrew Maloney	$	15,000	$	—	$	15,000
Dennis Mehiel	$	—	$	—	$	—
Myron L. Turfitt (3)	$	—	$	—	$	—

Fees and expenses paid to Directors are recorded as expense in the period in which the meetings are held, and deducted for income tax purposes in the year incurred.

(1) Martin R. Bring is a partner in the firm of Ellenoff, Grossman and Schole LLP. Mr. Bring was paid $204,000 on a retainer basis for legal and consulting services during fiscal 2012.

(2) Chairman of the Board and Chief Executive Officer of the Company.

(3) President and Chief Operating Officer of the Company.

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ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.

The following table sets forth certain information regarding ownership of Common Stock on November 19, 2012 by: (i) each stockholder known to the Company to own beneficially, directly or indirectly, more than 5% of the outstanding shares of Common Stock; (ii) each of the Company’s directors; and (iii) all officers and directors of the Company as a group. The Company believes that ownership of the shares by the persons named below is both of record and beneficial and such persons have sole voting and investing power with respect to the shares indicated.

Name and Address of Beneficial Owner	Number of Shares		Percent of Class
John A. Catsimatidis 823 Eleventh Avenue New York, NY 10019		100		100	%
All officers and directors as a group (13 persons)		100		100	%

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, DIRECTOR INDEPENDENCE.

On December 21, 2001, the Company acquired the operations and working capital assets of Country Fair. The fixed assets of Country Fair were acquired by related entities controlled by John A. Catsimatidis, the indirect sole shareholder of the Company. These assets are being leased to the Company at an annual aggregate rental which management, based on an independent third party valuation believes is fair, over a period ranging from 10 to 20 years. During the fiscal years ended August 31, 2012, 2011 and 2010, $5,049,000, $5,102,000, and $5,102,000 of rent payments were made to these related entities. The Company is not a guarantor on the underlying mortgages on the properties.

Concurrent with the above acquisition of Country Fair, the Company entered into a management agreement with a non-subsidiary affiliate to operate and manage 10 of the retail units owned by the non-subsidiary affiliate on a turn-key basis. For the years ended August 31, 2012, 2011 and 2010, the Company billed the affiliate $1,289,000, $1,266,000 and $1,243,000 for management fees and overhead expenses incurred in the management and operation of the retail units which amount was deducted from expenses. As of August 31, 2012 and 2011, the Company had a (payable) receivable to the affiliate of $(15,000) and $175,000, respectively, under the terms of the agreement, which is included in Amounts Due from Affiliated Companies, Net.

On September 29, 2000, the Company sold 42 retail units to an affiliate for $23,870,000. Concurrent with this asset sale, the Company terminated the leases on 8 additional retail locations which it had previously leased from a non-subsidiary affiliate. The Company has entered into a management agreement with the non-subsidiary affiliate to operate and manage the retail units owned by the non-subsidiary affiliate on a turnkey basis. For the years ended August 31, 2012, 2011 and 2010, the Company billed the affiliate $2,250,000, $2,032,000 and $2,099,000, respectively, for management fees and overhead expenses incurred in the management and operation of the 51 retail units, which amount was deducted from expenses. For the fiscal years ended August 31, 2012, 2011 and 2010, net sales to the affiliate amounted to $198,785,000, $184,749,000 and $140,277,000, respectively. As of August 31, 2012 and 2011, the Company had a (payable) receivable to the affiliate of $(241,000) and $342,000, respectively, under the terms of the agreement, which is included in amounts due from affiliated companies, net.

The Company paid a service fee relating to certain costs incurred by its Parent for the Company’s New York office. During the years ended August 31, 2012, 2011 and 2010, such fees amounted to approximately $2,000,000, $2,000,000, and $2,000,000, respectively, which is included in Selling, General and Administrative Expenses.

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The Company joins with the Parent and the Parent’s other subsidiaries in filing a Federal income tax return on a consolidated basis. Income taxes are calculated on a separate return basis with consideration of the Tax Sharing Agreement between the Parent and its subsidiaries. Amounts related to the Tax Sharing Agreement for the utilization by the Company of certain tax attributes of the Parent and other subsidiaries related to the tax years ended August 31, 2012 and 2011 amounted to $36,000 and $2,289,000, respectively and have been recorded as a capital contribution. As of August 31, 2012 and 2011, the Company had a receivable from the Parent of $344,000 and $2,586,000, respectively, under the terms of the Tax Sharing Agreement.

During the years ended August 31, 2012, 2011 and 2010, the Company incurred $357,000, $372,000 and $372,000, respectively as its share of occupancy expenses for our offices in New York that it shares with affiliates of the Company. Such offices are located in a building owned by John Catsimatidis.

ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES.

The following represents amounts billed and amounts expected to be billed to the Company for the professional services of BDO USA, LLP rendered during fiscal years 2012 and 2011:

	2012		2011
Audit Fees	$	479,000	$	801,000
Audit—Related Fees
Tax Fees		—		—
All Other Fees		—		—
Total	$	479,000	$	801,000

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ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES.

(a)(1)Financial Statements

A list of all financial statements filed as part of this report is contained in the index to Item 8, which index is incorporated herein by reference.

     (2)Financial Statement Schedules

Report of Independent Registered Public Accounting Firm

Schedule II – Valuation and Qualifying Accounts

     (3)Exhibits

Number	Description
3.1	Certificate of Incorporation of United Refining Company (“URC”). Incorporated by reference to Exhibit 3.1 to the Registrant’s Registration Statement on Form S-4 (File No. 333-35083) (the “Registration Statement”).
3.2	Bylaws of URC. Incorporated by reference to Exhibit 3.2 to the Registration Statement.
3.3	Certificate of Incorporation of United Refining Company of Pennsylvania (“URCP”). Incorporated by reference to Exhibit 3.3 to the Registration Statement.
3.4	Bylaws of URCP. Incorporated by reference to Exhibit 3.4 to the Registration Statement.
3.5	Certificate of Incorporation of Kiantone Pipeline Corporation (“KPC”). Incorporated by reference to Exhibit 3.5 to the Registration Statement.
3.6	Bylaws of KPC. Incorporated by reference to Exhibit 3.6 to the Registration Statement.
3.7	Certificate of Incorporation of Kiantone Pipeline Company (“KPCY”). Incorporated by reference to Exhibit 3.7 to the Registration Statement.
3.8	Bylaws of KPCY. Incorporated by reference to Exhibit 3.8 to the registration Statement.
3.9	Certificate of Incorporation of Kwik Fill Corporation. (“K-FC”). Incorporated by reference to Exhibit 3.9 to the Registration Statement.
3.10	Bylaws of K-FC. Incorporated by reference to Exhibit 3.10 to the Registration Statement.
3.11	Certificate of Incorporation of Independent Gasoline & Oil Company of Rochester, Inc. (“IGOCRI”). Incorporated by reference to Exhibit 3.11 to the Registration Statement.
3.12	Bylaws of IGOCRI. Incorporated by reference to Exhibit 3.12 to the Registration Statement.
3.13	Certificate of Incorporation of Bell Oil Corp. (“BOC”). Incorporated by reference to Exhibit 3.13 to the Registration Statement.
3.14	Bylaws of BOC. Incorporated by reference to Exhibit 3.14 to the Registration Statement.
3.15	Certificate of Incorporation of PPC, Inc. (“PPCI”). Incorporated by reference to Exhibit 3.15 to the Registration Statement.
3.16	Bylaws of PPCI. Incorporated by reference to Exhibit 3.16 to the Registration Statement.
3.17	Certificate of Incorporation of Super Test Petroleum, Inc. (“STPI”). Incorporated by reference to Exhibit 3.17 to the Registration Statement.
3.18	Bylaws of STPI. Incorporated by reference to Exhibit 3.18 to the Registration Statement.
3.19	Certificate of Incorporation of Kwik-Fil, Inc. (“K-FI”). Incorporated by reference to Exhibit 3.19 to the Registration Statement.
3.20	Bylaws of K-FI. Incorporated by reference to Exhibit 3.20 to the Registration Statement.
3.21	Certificate of Incorporation of Vulcan Asphalt Refining Corporation (“VARC”). Incorporated by reference to Exhibit 3.21 to the Registration Statement.
3.22	Bylaws of VARC. Incorporated by reference to Exhibit 3.22 to the Registration Statement.
3.23	Certificate of Incorporation of United Jet Center, Inc. (“UJCI”). Incorporated by reference to Exhibit 3.23 to the Registration Statement.
3.24	Bylaws of UJCI. Incorporated by reference to Exhibit 3.24 to the Registration Statement.

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Number	Description
4.1	First Supplemental Indenture, dated March 8, 2011, by and among URC, CFI, KPC, KPCY, UJCI, URCP, KFC, IGOCRI, BOC, PPCI, STPI, K-FI, VARC and The Bank of New York Mellon, as trustee relating to the 10 1/2% Senior Notes due 2012 . Incorporated by reference to Exhibit 4.1 to URC’s Current Report on Form 8-K filed on March 11, 2011.
4.2	Indenture dated as of March 8, 2011, among URC, CFI, KPC, KPCY, UJCI, URCP, KFC, IGOCRI, BOC, PPCI, STPI, K-FI, VARC and The Bank of New York Mellon Trust Company, N.A., as Trustee and Collateral Agent, relating to the 10.500% First Priority Senior Secured Notes due 2018. Incorporated by reference to Exhibit 4.2 to URC’s amended Current Report on Form 8-K filed on March 22, 2011.
4.3	Form of Note (included in Exhibit 4.2).
10.1	Servicing Agreement dated June 9, 1997 between URC and Red Apple Group, Inc. Incorporated by reference to Exhibit 10.4 to the Registration Statement.
10.2	Amended and Restated Credit Agreement, dated May 18, 2011, by and among United Refining Company, United Refining Company of Pennsylvania, Kiantone Pipeline Corporation, Country Fair, Inc., the lenders party thereto, PNC Capital Markets LLC and Merrill Lynch, Pierce, Fenner & Smith Inc., as Co-Lead Arrangers and Joint Bookrunners, PNC Bank, National Association, as Administrative Agent and Bank of America, N.A., as Documentation Agent. Incorporated by reference to Exhibit 10.2 to the Registrant’s Registration Statement on Form S-4 (File No. 333-173809).
10.3	Purchase Agreement dated February 25, 2011, by and between United Refining Company and Credit Suisse Securities (USA) LLC relating to the purchase of $365,000,000 of 10.500% First Priority Senior Secured Notes Due 2018. Incorporated by reference to Exhibit 10.1 to URC’s Quarterly Report on Form 10-Q for the fiscal quarter ended February 28, 2011.
10.4	Registration Rights Agreement dated March 8, 2011, between URC, CFI, KPC, KPCY, UJCI, URCP, KFC, IGOCRI, BOC, STPI, K-FI, VARC and Credit Suisse Securities (USA) LLC, as representative for the several initial purchasers named therein. Incorporated by reference to Exhibit 4.4 to URC’s Current Report on Form 8-K filed on March 11, 2011.
10.5	Security Agreement, dated March 8, 2011, between URC and The Bank of New York Mellon Trust Company, N.A., as Collateral Agent. Incorporated by reference to Exhibit 4.3 to URC’s Current Report on Form 8-K filed on March 11, 2011.
10.6	Intercreditor Agreement dated as of March 8, 2011, by and among The Bank of New York Mellon Trust Company, N.A., as Collateral Agent, PNC Bank, National Association, as Agent for itself and the Bank Lenders, URC, URCP, KPC, CFI and K-FI. Incorporated by reference to Exhibit 10.1 to URC’s Current Report on Form 8-K filed on March 11, 2011.
10.7	Open-End Mortgage, Security Agreement, Assignment of Leases and Rents and Fixture Filing, dated as of March 8, 2011, between the Company and The Bank of New York Mellon Trust Company, N.A., as Collateral Agent. Incorporated by reference to Exhibit 10.2 to URC’s Current Report on Form 8-K filed on March 11, 2011.
14.1	Code of Ethics pursuant to Section 406 of the Sarbanes-Oxley Act of 2002. Incorporated by reference to Exhibit 14.1 in Registrant’s Annual Report on Form 10-K for fiscal year ended August 31, 2003.
21.1	Subsidiaries of the Registrants. A) Incorporated by reference to Exhibit 21.1 to the Registration Statement. B) Country Fair, Inc. Incorporated in the Commonwealth of Pennsylvania in 1965, doing business as “Country Fair”.
*31.1	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
*31.2	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
*32.1	Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101	Interactive XBRL Data.

* Filed herewith.

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Report of Independent Registered Public Accounting Firm

To the Board of Directors and

Stockholder of United Refining Company

Warren, Pennsylvania

The audits referred to in our report dated November 15, 2012 relating to the consolidated financial statements of United Refining Company, which is contained in Item 8 of this Form 10-K also included the audit of the financial statement schedule listed in the accompanying index. This financial statement schedule is the responsibility of the Company’s management. Our responsibility is to express an opinion on this financial statement schedule based on our audits.

In our opinion such financial statement schedule, when considered in relation to the consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein.

/s/ BDO USA, LLP

New York, New York

November 19, 2012

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UNITED REFINING COMPANY AND SUBSIDIARIES

SCHEDULE II—VALUATION AND QUALIFYING ACCOUNTS

(in thousands)

Description	Balance at Beginning of Period		Charged to Costs and Expenses		Deductions			Balance at End Of Period
Year ended August 31, 2010:
Reserves and allowances deducted from asset accounts:
Allowance for uncollectible Accounts	$	2,525	$	954	$	(1,429	)	$	2,050
Year ended August 31, 2011:
Reserves and allowances deducted from asset accounts:
Allowance for uncollectible Accounts	$	2,050	$	1,347	$	(1,597	)	$	1,800
Year ended August 31, 2012:
Reserves and allowances deducted from asset accounts:
Allowance for uncollectible Accounts	$	1,800	$	1,015	$	(1,015	)	$	1,800

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	UNITED REFINING COMPANY
Dated: November 19, 2012	By:	/s/ Myron L. Turfitt
		Myron L. Turfitt President and Chief Operating Officer

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated:

Signature	Title	Date
/s/ John A. Catsimatidis John A. Catsimatidis	Chairman of the Board, Chief Executive Officer and Director	November 19, 2012
/s/ Myron L. Turfitt Myron L. Turfitt	President, Chief Operating Officer and Director	November 19, 2012
/s/ James E. Murphy James E. Murphy	Vice President and Chief Financial Officer (Principal Accounting Officer)	November 19, 2012
/s/ Martin R. Bring Martin R. Bring	Director	November 19, 2012
/s/ Jacob Feinstein Jacob Feinstein	Director	November 19, 2012
/s/ Kishore Lall Kishore Lall	Director	November 19, 2012
/s/ Douglas Lemmonds Douglas Lemmonds	Director	November 19, 2012
/s/ Andrew Maloney Andrew Maloney	Director	November 19, 2012
/s/ Dennis Mehiel Dennis Mehiel	Director	November 19, 2012

87

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	UNITED REFINING COMPANY OF PENNSYLVANIA
Dated: November 19, 2012	By:	/s/ Myron L. Turfitt
		Myron L. Turfitt President and Chief Operating Officer

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated:

Signature	Title	Date
/s/ John A. Catsimatidis John A. Catsimatidis	Chairman of the Board, Chief Executive Officer and Director	November 19, 2012
/s/ Myron L. Turfitt Myron L. Turfitt	President, Chief Operating Officer	November 19, 2012
/s/ James E. Murphy James E. Murphy	Vice President and Chief Financial Officer (Principal Accounting Officer)	November 19, 2012

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	KIANTONE PIPELINE CORPORATION
Dated: November 19, 2012	By:	/s/ Myron L. Turfitt
		Myron L. Turfitt President and Chief Operating Officer

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated:

Signature	Title	Date
/s/ John A. Catsimatidis John A. Catsimatidis	Chairman of the Board, Chief Executive Officer and Director	November 19, 2012
/s/ Myron L. Turfitt Myron L. Turfitt	President, Chief Operating Officer and Director	November 19, 2012
/s/ James E. Murphy James E. Murphy	Vice President and Chief Financial Officer (Principal Accounting Officer)	November 19, 2012

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	KIANTONE PIPELINE COMPANY
Dated: November 19, 2012	By:	/s/ Myron L. Turfitt
		Myron L. Turfitt Executive Vice President

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated:

Signature	Title	Date
/s/ John A. Catsimatidis John A. Catsimatidis	Chairman of the Board, Chief Executive Officer and Director	November 19, 2012
/s/ Myron L. Turfitt Myron L. Turfitt	Executive Vice President	November 19, 2012
/s/ James E. Murphy James E. Murphy	Vice President and Chief Financial Officer (Principal Accounting Officer)	November 19, 2012

90

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	UNITED JET CENTER, INC.
Dated: November 19, 2012	By:	/s/ Myron L. Turfitt
		Myron L. Turfitt Executive Vice President

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated:

Signature	Title	Date
/s/ John A. Catsimatidis John A. Catsimatidis	Chairman of the Board, Chief Executive Officer and Director	November 19, 2012
/s/ Myron L. Turfitt Myron L. Turfitt	Executive Vice President	November 19, 2012
/s/ James E. Murphy James E. Murphy	Vice President and Chief Financial Officer (Principal Accounting Officer)	November 19, 2012

91

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	VULCAN ASPHALT REFINING CORPORATION
Dated: November 19, 2012	By:	/s/ Myron L. Turfitt
		Myron L. Turfitt Executive Vice President

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated:

Signature	Title	Date
/s/ John A. Catsimatidis John A. Catsimatidis	Chairman of the Board, Chief Executive Officer and Director	November 19, 2012
/s/ Myron L. Turfitt Myron L. Turfitt	Executive Vice President	November 19, 2012
/s/ James E. Murphy James E. Murphy	Vice President and Chief Financial Officer (Principal Accounting Officer)	November 19, 2012

92

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	KWIK-FIL, INC.
Dated: November 19, 2012	By:	/s/ Myron L. Turfitt
		Myron L. Turfitt Executive Vice President

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated:

Signature	Title	Date
/s/ John A. Catsimatidis John A. Catsimatidis	Chairman of the Board, Chief Executive Officer and Director	November 19, 2012
/s/ Myron L. Turfitt Myron L. Turfitt	Executive Vice President	November 19, 2012
/s/ James E. Murphy James E. Murphy	Vice President and Chief Financial Officer (Principal Accounting Officer)	November 19, 2012

93

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	KWIK-FILL CORPORATION
Dated: November 19, 2012	By:	/s/ Myron L. Turfitt
		Myron L. Turfitt Executive Vice President

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated:

Signature	Title	Date
/s/ John A. Catsimatidis John A. Catsimatidis	Chairman of the Board, Chief Executive Officer and Director	November 19, 2012
/s/ Myron L. Turfitt Myron L. Turfitt	Executive Vice President	November 19, 2012
/s/ James E. Murphy James E. Murphy	Vice President and Chief Financial Officer (Principal Accounting Officer)	November 19, 2012

94

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	INDEPENDENT GASOLINE & OIL COMPANY OF ROCHESTER, INC.
Dated: November 19, 2012	By:	/s/ Myron L. Turfitt
		Myron L. Turfitt Executive Vice President

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated:

Signature	Title	Date
/s/ John A. Catsimatidis John A. Catsimatidis	Chairman of the Board, Chief Executive Officer and Director	November 19, 2012
/s/ Myron L. Turfitt Myron L. Turfitt	Executive Vice President	November 19, 2012
/s/ James E. Murphy James E. Murphy	Vice President and Chief Financial Officer (Principal Accounting Officer)	November 19, 2012

95

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	BELL OIL CORP.
Dated: November 19, 2012	By:	/s/ Myron L. Turfitt
		Myron L. Turfitt Executive Vice President

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated:

Signature	Title	Date
/s/ John A. Catsimatidis John A. Catsimatidis	Chairman of the Board, Chief Executive Officer and Director	November 19, 2012
/s/ Myron L. Turfitt Myron L. Turfitt	Executive Vice President	November 19, 2012
/s/ James E. Murphy James E. Murphy	Vice President and Chief Financial Officer (Principal Accounting Officer)	November 19, 2012

96

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	PPC, INC.
Dated: November 19, 2012	By:	/s/ Myron L. Turfitt
		Myron L. Turfitt Executive Vice President

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated:

Signature	Title	Date
/s/ John A. Catsimatidis John A. Catsimatidis	Chairman of the Board, Chief Executive Officer and Director	November 19, 2012
/s/ Myron L. Turfitt Myron L. Turfitt	Executive Vice President	November 19, 2012
/s/ James E. Murphy James E. Murphy	Vice President and Chief Financial Officer (Principal Accounting Officer)	November 19, 2012

97

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	SUPER TEST PETROLEUM, INC.
Dated: November 19, 2012	By:	/s/ Myron L. Turfitt
		Myron L. Turfitt Executive Vice President

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated:

Signature	Title	Date
/s/ John A. Catsimatidis John A. Catsimatidis	Chairman of the Board, Chief Executive Officer and Director	November 19, 2012
/s/ Myron L. Turfitt Myron L. Turfitt	Executive Vice President	November 19, 2012
/s/ James E. Murphy James E. Murphy	Vice President and Chief Financial Officer (Principal Accounting Officer)	November 19, 2012

98

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	COUNTRY FAIR, INC.
Dated: November 19, 2012	By:	/s/ Myron L. Turfitt
		Myron L. Turfitt President and Chief Operating Officer

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated:

Signature	Title	Date
/s/ John A. Catsimatidis John A. Catsimatidis	Chairman of the Board	November 19, 2012
/s/ Myron L. Turfitt Myron L. Turfitt	President and Chief Operating Officer	November 19, 2012
/s/ James E. Murphy James E. Murphy	Vice President - Finance	November 19, 2012

99

SUPPLEMENTAL INFORMATION TO BE FURNISHED WITH REPORTS FILED PURSUANT TO SECTION 15(d) OF THE ACT BY REGISTRANTS WHICH HAVE NOT REGISTERED SECURITIES PURSUANT TO SECTION 12 OF THE ACT

No annual report or proxy material was sent to security holders by the Corporation during the fiscal year ended August 31, 2012.

100